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Bearishness in Indian PP, PE markets to continue through July

by Shibu Itty Kuttickal -
  • 06/07/2022 (11:13)
The ban on single-use plastics and the continuing Chinese oversupply situation because of suppressed demand have led to a bearish market for both PP and PE in India. Traders expect prices to keep falling in July as buyers stay away, pointing to continuing drops in other Asian markets.

“It’s not a great season for polyolefins anyway as we’re in the middle of monsoon. A widening gap between the prices of imports in India, on the one hand, and the Northeast Asian and Southeast Asian markets, on the other, is also keeping away buyers,” an Indian trader said. “Don’t expect them to return any time soon,” he added.

Ban on single-use plastics hits polyolefin markets

Traders also said the ban on single-use plastics has affected the polyolefins market in a big way. “Everyone knew the ban would be implemented with effect from July 1. But there was hope that the government would give more time for converters to prepare for the ban,” a trader said.

“Now that the ban has happened, it’ll have an impact across the spectrum of polyolefin products. High-molecular weight HDPE will be the worst affected. We are in a situation where people are already sitting on excess inventories and are expecting more to come in. People have started wondering what’s to be done in such a situation,” he added.

HDPE, LLDPE prices slide from June levels

Traders quoted most HDPE grades below $1300/ton CIF. “When we factor in freight of $130/ton or lower from China to India, the prices could even go much lower,” a trader said, pointing to re-export offers from China.

Offers for LLDPE film are currently at around $1320/ton CIF, or slightly lower. “There are higher bids from other South Asian markets. Direct customers in India may buy at levels slightly above $1320/ton, but traders are not willing to bid at anything above that level,” the trader said. Both LLDPE and HDPE, reported during mid-May in the low-to-mid $1400s/ton, had fallen to the mid-$1300s/ton CIF India by early June.

LDPE supplies remain ample

Traders said LDPE film offers were relatively better, with prices being quoted around $1530/ton CIF, similar levels from early June. But traders believe it’s only a matter of time before LDPE prices also fall. LDPE film offers were heard in a $1530-1550/ton range in early June, sharply down from prices ChemOrbis reported on May 17 in the mid-$1600s/ton CIF.

“LDPE supplies continue to be ample in the current low-demand season. Prices are likely to stay under pressure for the next one to one to two months,” the trader added.

Lack of confidence in PP market

PP raffia prices were holding up relatively well, but traders expected a slowdown in that market too. PP raffia and inj. prices were reported in the low to mid-$1300s/ton, slightly lower than early June levels.

“Confidence is at a low ebb in the country’s PP markets. There is currently concern that supplies can only increase and not fall as Northeast Asian suppliers try to offload surpluses elsewhere. Prices will stay depressed,” a trader added.

Record-low rupee pressures import prices further

Meanwhile, a widening current account deficit in India has pressured the Indian rupee to a new all-time low in Tuesday’s trading and has further pressured Indian import prices.

The rupee closed trading on Tuesday at INR79.37/79.38 per dollar, after hitting a life low of INR79.3750. It had touched a previous record low of INR79.12 last week and closed trading at 78.95 on Monday.

“Rupee has been hitting new historical lows repeatedly in the past couple of months and this has kept import prices of a wide range of commodities under pressure. The forecast is for the currency to rise above INR80/ton shortly, which meant further pressure on import prices,” a Mumbai-based polymer trader said.
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