India PE, PP import prices stay firm amid tight global supply

Focus article by Veena Pathare

SINGAPORE (ICIS)–India’s overall polyolefin import markets look set to stay firm amid tight supply across global markets, but improved domestic availability may weigh down on prices of high density polyethylene (HDPE) and linear low density PE (LLDPE).

For polyolefins originating in the Gulf Cooperation Council (GCC), import prices have increased in recent weeks because of scarce supply of spot cargoes, market sources said.

“We expect the outlook to remain firm until March or even April, because of tight availability,” a GCC-based producer said.

On 3 February, low density polyethylene (LDPE) prices were assessed at $1,290-1,320/tonne CFR (cost and freight) India, up $30/tonne from the previous week, according to ICIS data.

Import activity was robust as buyers were replenishing their inventory, market sources said.

PP raffia prices were assessed on 3 February at $1,060-1,080/tonne CFR India, up $10/tonne week on week. Suppliers were unwilling to discuss lower levels owing to limited allocations.

High density PE (HDPE) prices also increased by $10/tonne over the same period to $1,140-1,160/tonne CFR India, while linear low density PE (LLDPE) fell $10/tonne at the high end of the previous week’s price range to $1,180-1,190/tonne CFR India, according to ICIS data.

Supply coming from the GCC and Asia is curtailed by a spate of scheduled maintenance, as well at outages, at a number of facilities, market sources said.

India’s demand for imports, on the other hand, has started to improve in January, about two months after the demonetisation of high-value currency notes that triggered a domestic currency crunch.

The country’s PE and PP demand fundamentals remain robust, with end-users needing to restock following weak buying activities in November and December precipitated by the surprise demonetisation of rupees (Rs) 500 and Rs1,000 notes.

March import cargoes may also fetch higher prices in India given expectations of a further uptrend in demand, with China also actively competing for supply, market sources said.

Demand from China – a key import market for polyolefins – is poised to strengthen in the weeks ahead as buyers are expected to restock following a week-long Lunar New Year holiday in the country. China was on holiday from 27 January to 2 February.

“China demand is also expected to come back by 10 February because buying there is good and buyers need to stock up after the [Lunar] New Year holiday,” the GCC-based producer said.

Meanwhile, the outlook for HDPE and LLDPE imports in India, is not as upbeat as for other grades, as domestic availability is expected to grow in the first quarter, market sources said.

Domestic producer GAIL India Ltd resumed operations at its 400,000 tonne/year LLDPE/HDPE swing facility in end-January, after more than a month of shutdown. Technical issues at the plant’s reactor forced its shutdown in December.

Another local PE major ONGC Petro additions Ltd (OPaL), on the other hand, is in the initial stages of starting up its two 360,000 tonnes/year LLDPE/HDPE swing lines in February, after achieving on-spec output at its standalone HDPE and PP units, which have a designed capacity of 340,000 tonnes/year each.

Reliance Industries Ltd (RIL), which is also a polyolefins major, is also on track to start up its LDPE and LLDPE/HDPE swing lines by the end of the first quarter.

Consequently, Indian importers have taken a cautious stance on HDPE and LLDPE imports.

“Domestic prices are likely to be competitive as new producers attempt to gain market shares, thereby impacting imports,” an Indian trader said.

“We are going to be very conservative in our HDPE and LLDPE bookings going forward as we don’t know what pricing strategy local producers are looking at,” an Indian importer said.