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Ample supplies weigh on India’s PE markets; firm costs put a floor under PP

by Shibu Itty Kuttickal -
  • 03/04/2024 (01:45)
Ample availability in both domestic and regional markets put pressure on PP and PE prices in India, despite the rise in energy and feedstock costs and the strength in the country’s economic fundamentals. The market also saw lower buying activity ahead of the fiscal year ending on March 31.

While PP markets were supported by a rise in costs and saw prices stabilizing around the previous month’s levels, PE prices were heard softer, pressured by the ample supplies from importers to India as well as in the domestic markets, traders said.

Sellers of polyolefins have been hesitant to reduce prices as they point to the higher costs, but the buying appetite seems to be waning in India amid adequate supplies at local and regional players.

Buying activity recedes ahead of fiscal year-end

Traders in India said the increased buying by the packaging and pipe industries that is typical in the first quarter seemed to be receding in March. The typical financial year-end sentiment as players try to minimize inventories also seemed to act on market minds. India’s fiscal year begins on April 1 and ends on March 31.

“The buying party seems to be over for now as players are confident of current availabilities. Most buyers seem to have enough inventories at least for the near term, and there’s also no concern being expressed over any supply squeeze in the second quarter,” said an Indian trader.

Costs and macro-economy stay supportive

At the same time supportive factors remained as manufacturing activity in India continued to gallop and energy and feedstock prices stayed strong. On a monthly basis, ChemOrbis Price Wizard shows Brent crude futures in March have jumped by about 10% since December, while import ethylene prices in Southeast Asia have risen by about 16%, and in China by about 8% during the same period. As for propylene, prices have mostly been rangebound during the same period.

On the macroeconomic front, India’s manufacturing purchasing managers’ index (PMI) reached a 16-year high in March because of significant increases in output and new orders. According to the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index™ (PMI) conducted by S&P Global, the country’s manufacturing PMI rose to 59.1 in March, up from 56.9 in February. And the country’s industrial output grew by 3.8% year-on-year in January, following an upwardly revised 4.2% growth in December.

However, ample availability in the domestic and regional markets remained a drag on polyolefin prices during March.

LDPE prices down on buyer resistance

LDPE film prices in India were noted to have fallen by $20-30/ton during the month, with tradable levels in early April being noted mostly below the mid-$1100s/ton and a low-end as low as $1100/ton CIF India. In comparison, the levels were noted in a $1140-1160/ton CIF about a month ago.

“Offer levels were maintained at high levels but buyers in India were offering stiff resistance, leading to prices being lowered,” a trader said. He also noted that the financial year end has resulted in lower demand as players wanted to show low inventories.

LLDPE prices plunge on ample supplies

LLDPE film prices fell on ample supplies, especially from domestic producers in India. “Availability of LLDPE is not an issue in the Indian market. We’re hearing lower trading indications almost daily. There is intense competition among domestic producers to gain more market share,” an Indian trader said.

This also meant international suppliers being cornered as they found it difficult to lower prices to the Indian levels because of the higher costs. The trader said players are ignoring the import offers as the local market trended downwards.

According to the trader, low-end prices of LLDPE film was noted as low as $900/ton CIF India, from the mid-$900s/ton about a month ago. At the high end, sellers were finding it hard to maintain prices above the mid-$900s/ton, he added. Most trading indications a month ago pointed to prices slightly lower than the $1000/ton mark.

Availability pushes HDPE prices down

As for HDPE, the buying appetite across Asia was noted by Indian traders as weakening amid adequate inventories with operators throughout the region. “We’re following the trend elsewhere closely and are making purchases only when there is an immediate requirement,” a trader said.

In India, buyers were in no hurry to replenish stocks. Prices dropped below the $1000/ton mark in the latest week, with buying-selling ideas noted in a $985-1020/ton levels during the week, down from $1030-1060/ton CIF India reported about a month ago. “Prices are much lower amid high competition among Indian producers. There are absolutely no buyers for anything offered at higher prices,” a trader said. However, he agreed that with rising costs, producers may have no option but to keep raising prices. “Hopefully, they may find some acceptance in the near term,” he added.

PP raffia low ends stay below the $1000/ton mark

PP homopolymer raffia and injection prices continued to be quoted as low as $990/ton CIF India, although some indications were heard even slightly lower than that level. The high ends were noted around $1025/ton CIF India.

According to traders, PP import offers were fewer than what was noted for PE, and this kept prices mostly rangebound despite ample availability in the market. “The sellers are not too keen to reduce offers and find themselves sidelined,” one of them said. “And we find, shipments booked earlier are continuing to be discharged, which already adds to an oversupplied domestic market,” he added.
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