Bull run rolls on in Indian PP, PE markets amid production issues

PP and PE prices have been steadily rising since early January in India. A stronger buying momentum resulting from a persistent rise in upstream markets has continued to propel import PP and PE prices higher in India, while technical issues and a turnaround have lent extra support to the upturn recently.

While stock building has been noted since the beginning of the year, players have reported increased buying momentum in the past couple of weeks. This is mostly because the strength in upstream markets has raised expectations of higher prices in the weeks ahead. Technical issues reported in Indian plants have also boosted the polyolefin markets.

Import PP, PE offers heard 3-4% higher in February

Import offers of homo-PP raffia are being reported at $1410 -1450/ton CIF India for second-half February delivery cargoes. This is $60/ton, or about 4%, higher than prices reported in late January .

Traders also reported import PE prices 3-4% higher with Middle Eastern offers particularly from Kuwait heard at $1310-1340/ton CIF India for both LLDPE and HDPE and at the low-$1600s/ton for LDPE.

Demand perks up despite nearing financial year-end

“We are seeing more buyers in the market, egged on by higher oil prices and the resultant increase in feedstock costs,” a Mumbai-based trader said. “Demand for plastic products is always expected to rise before the June-August monsoon rainy season. March typically sees a paring down of stocks as players prepare for the financial year-ending, but it’s unlikely this year as inventory levels are not too high currently,” he added.

OPaL set for turnaround in April; production disruptions heard at others

“Everyone is buying on expectations of price hikes ahead and this has boosted the market. Apart from the strength in the energy complex, there’s some talk of technical issues at Indian polyolefin producers, namely Indian Oil and MRPL. This has lifted prices further,” said a source close to the matter. This news has not been confirmed by the producers at the time of press.

ONGC Petro additions Limited (OPaL) has announced a turnaround for a month from April 1 at production facilities in its northern Indian complex, meanwhile. Apart from a dual feed cracker unit with a capacity to produce 1.1mn tons of ethylene and 400,000 tons of propylene, it has two 360,000 tons/year LLDPE/HDPE swing units and one 340,000 tons/year dedicated HDPE unit, apart from a 350,000 tons/year PP plant.

“This would certainly compound the bullish impact on the market, as buyers are already out to restock on expectations of higher prices,” the source added.

C2 prices surge 9%; C3 up 3% after Lunar New Year holidays

Ethylene prices have surged by about $90/ton, or about 9%, from last week to $1100/ton CFR China, while propylene prices continued its bull run since mid-December, rising by $30/ton, or about 3%, to $1095/ton CFR China. Although propylene has risen by a smaller amount, its uptrend has been in place since early 2022 with a cumulative increase of 11%.

Traders expect both Middle East and Asian offers to be raised as a result of the higher costs. “We also don’t see a respite to the increase in freight rates that have continued to raise import costs,” he added.

India’s buying appetite for import PP and PE grows

Buying appetite particularly for PP imports has been growing in India over the years, with 2021 imports hitting a record-high despite large-scale domestic production. According to ChemOrbis Stats Wizard, January-November 2021 P imports of India moved above the 1 million ton threshold — rising by about 32% from full year 2020.

Total PE imports into India in Jan-Nov 2021 have already surpassed last year’s full levels to 1.26 million tons, ChemOrbis Stats Wizard suggests. Although 2021 will not be an all-time high - once December data is revealed, it will be the highest PE imports of the past four years .