SINGAPORE (ICIS)--Polyethylene (PE) producers in India have invoked a price protection for high density PE (HDPE) and linear low density PE (LLDPE) grades amid ample availability in the local market, market sources said on Friday.
The price protection is in place from 22 September up to the end of the month, to allow producers to move volumes while assuaging buyers’ concerns that prices will decline in the coming weeks.
Under this scheme, buyers can procure the volumes between now and end-September but at prices that will be set on 1 October.
Producers have refrained from announcing any revision to their posted prices during the week.
“As a practice, we don’t revise prices at the end of the month, hence decided to roll over the prices from the previous week,” a source close to a major producer said.
“Buyers have been buying on a need-to basis owing to an uncertain price outlook, and that has led to a build-up of stocks. We hope the price protection announced gets buyers to purchase more,” the source said.
For low density PE (LDPE) grade, however, listed prices were rolled over without any protection or discount scheme, market sources said.
LDPE was a relatively smaller and controlled market with stable demand and a limited number of suppliers, compared with the more mainstream LLDPE and HDPE grades, negating the need for a price protection scheme, market players said.
The scheme could be an attempt by domestic producers to regulate PE imports into India, some market players said.
“A price protection scheme imparts uncertainty to future import prices. When producers announce this, buyers stop import discussions because they think prices are likely to fall in the future, so whatever buying was underway – even that stops,” a PE processor said.
Traders are expected to be hit as this move by producers translates to considerable risk to their import purchases, market sources said.
“Traders are the most affected, since it becomes difficult to take a call on future pricing and decide whether to import or not at a particular price today,” an Indian trader said.
Import activity in the south Asian country remained largely subdued during the week, as market players waited for fresh October indications from key suppliers.
Ample availability of domestic product is likely to hinder discussions and acceptable price levels for imports of October cargoes, market sources said.
Focus article by Veena Pathare
Picture: Kochi port in Kerala, India (Photographer: Olaf Kruger/imageBROKER/REX/Shutterstock)
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