INTERACTIVE: China homopolymer PP imports from India may shrink further

17 August 2017 07:34 Source:ICIS News

food packaging 17 August

SINGAPORE (ICIS)--China’s imports of homopolymer polypropylene (PP) from India have been shrinking over the past years, and may fall further amid months-long tension at the border of Asia’s two biggest emerging economies, industry sources said.

In the first half of 2017, India’s share to China’s overall imports of the material have fallen to 3.3% from 8.2% in 2013, official data showed.

China's total imports of the polymer grade for the period stood at 1.61m tonnes, which accounted for 23% of its overall consumption, according to official data.

In 2016, the country’s total homopolymer PP imports declined by 11% to 3.02m tonnes, as domestic production increased by 10.4% to 13.3m tonnes, according to data compiled by the China editorial team at ICIS.

China homo PP supply-demand (in thousand tonnes)

Year

2015

2016

H1 2017

Domestic output

12,001

13,252

6,802

Import volume 

3,400

3,020

1,606

Export volume 

166

240

174

Total demand 

12,202

13,531

6,976

Source: China editorial team at ICIS

Indian suppliers have taken to prioritizing demand from its domestic market, where supply is short and prices are higher compared with exports, industry sources said.

Homopolymer PP offers from Reliance Industries Ltd (RIL), India’s largest PP producer and supplier to China, have been less frequent, according to market sources from China.

In July, RIL announced its offers to China for September-loading cargoes at $1,030/tonne and the volume was relatively small at around 7,000 tonnes.

In 2016, the Indian conglomerate had offered homopolymer PP cargoes to China on a monthly basis, with the full-year total estimated at 100,000 tonnes, industry sources said.

Some traders said that they were seeking Reliance cargoes at higher prices so as to meet the demand of their downstream buyers in China which could not easily switch to using domestic material.

Chinese domestic traders such as Zhejiang Future Petrochemical, Xiamen Xiangyu Group, on the other hand, welcome fewer imports from India as this meant they can command better prices for their material.

China’s import volumes of homopolymer PP from India are unlikely to post strong growth in the near term, amid the row over boundaries between the two countries for two months now, industry sources said.

China’s Ministry of Foreign Affairs dubbed as “illegal” the 18 June crossing of Indian armed troops into Chinese territory of the Sikkim sector, located in northeastern India and in southwestern China.

China was building a road in the Dong Land area, on the Chinese side of the Sikkim sector, when on 18 June, “over 270 Indian border troops, carrying weapons and driving two bulldozers, flagrantly crossed the boundary in the Sikkim Sector at the Duo Ka La (Doka La) pass and advanced more than 100 meters into the Chinese territory to obstruct the road building of the Chinese side,” according to Geng Shuan, the spokesperson for China's Ministry of Foreign Affairs on 3 August.

It claimed that the Indian government has been notified of the road construction plan in May.

India’s Ministry of External Affairs on 30 June noted that the road construction on the border was a “unilateral activity”, which was opposed by Bhutan, which is situated northwest of India, with the Sikkim border on its eastern side.

“India is deeply concerned at the recent Chinese actions and has conveyed to the Chinese Government that such construction would represent a significant change of status quo with serious security implications for India,” the India ministry said.

The border tensions between China and India, if prolonged, could have widespread implications on trades, industry sources said.

In 2016, the total trade between China and India stood at $71.2bn, up by 0.6% from the previous year, according to official data.

China trade with India (in $bn)

Year

Exports to India 

Imports from India

Total trade

2016

11.75

59.43

71.18

2015

13.4

58.26

71.65

 

-12.29%

2.01

-0.66%

Source: China Customs

Focus article by Dora Xue

Additional reporting by Fanny Zhang and Nurluqman Suratman

Pictured above: Homopolymer grades of polypropylene (PP) are mainly used in food, fertilizer and cement packaging. (Source: Global Warming Images/REX/Shutterstock)

By Dora Xue