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India PP, PE markets change direction in line with regional trends in Asia

by Shibu Itty Kuttickal -
  • 08/03/2023 (02:46)
Following the gains recorded in January and February, import PP and PE prices in India have changed direction and tracked a stable to softer trend over the last couple of weeks in a market mostly balanced between a lack of demand and higher costs. The country’s polyolefin sentiment has been hit by the fact that the post-CNY firming in China has proved unsustainable.

Most Indian players agreed that consumption was down at home. At the same time, the market has been supported by the lower arrivals from the Middle East production hubs. But as lost capacities in that region get back on stream, they expect larger volumes being available for the Indian import markets.

“It’s obviously a market driven by supply-demand equations,” said a trader in the western Indian city of Mumbai. “It is obvious that consumption is down. At the same time, we have lower arrivals from the Middle East production hubs because of turnarounds,” he added.

Impact of China’s parliament session keenly followed

Eyes were also on the National People’s Congress, China’s parliament, which began on Sunday. “There seems to be an impasse currently in the market as people are watching for a government reshuffle and new economic policies from the NPC,” the trader said.
“Market players are waiting for some signals from the Congress regarding the direction of China’s economic policies before committing to any large-scale trade,” he added.

Re-exports from China put pressure on import prices

Re-export cargoes from China have also pressured PE prices in India, market players said. But there were expectations of demand in China increasing in the near term, reducing export availability from that market and import supplies for India.

Players said LDPE prices were about $10-20/ton lower than the previous month at $1080-1140/ton amid a rising number of re-export cargoes from China as well as the reduction of freight rates from China to most parts of the world. “Import prices into India have gone below the $1150/ton mark but any increase in demand could check any runaway slide in the grade,” said a marketing source at a major Indian producer.

LD’s import pricing delta with LL, HD keeps shrinking

LDPE’s import pricing delta with LLDPE and HDPE continued to shrink. Traders said LLDPE and HDPE prices were just about $20-30/ton lower than LDPE in the Indian import market.

“It’s turned to be a difficult proposition selling LDPE in the Indian subcontinent,” the source said. “As a Bangladesh buyer told me, if I’m able to sell 5000 tons of LLDPE, I can dispose only 400-500 tons of LDPE, which is only about 5-10% of the total PE requirements in the country. At the same time, LDPE prices could have reached, or may soon reach, levels which could attract buyers,” he added.

Import homo-PP raffia prices, which saw a sharp $100/ton increase in mid-February from levels noted in mid-January, have since fallen as a result of the availability of Chinese shipments. Traders said Chinese shipments of PPH raffia were available at levels as low as $1040/ton CIF India. The higher PP prices last month were largely a reflection of large capacities taken offline in February. But more PP production has returned on stream, which would likely ease the tightness in the markets.

“We’ve seen large-scale buying in China during October-November, when LLDPE, HDPE and raffia CIF prices were around the $900/ton levels, or even lower. But as demand has been lacklustre, most traders have been looking at new homes for the cargoes and it pays to move them to India, which offers reasonable netbacks currently,” the Mumbai-based trader said.

Arrivals from Mideast Gulf to improve in near term

“We expect arrivals from the Mideast Gulf to improve in the near term, but prices may still not dive from the current levels as there could be an increase in Chinese demand. An increase in demand in China will obviously have implications on availabilities from that market,” he added.

ChemOrbis Production NewsPro shows 1.4 million tons/year, or about 16%, of the total global PP capacity of 9.6 million being offline in March. But in April, only 6% of the global capacity will be offline. As for the Middle East and Africa region, 135,000 tons/year, or about 14% of the total capacity have been taken offline in March, which will be reduced to about 2% in April. In India, about 45,000 tons/year, or about 28.5% of the total capacity are currently offline, which will be reduced to about 2% in April.

As for PE, lost capacities currently account for about 1.1 million tons/year, or 9%, of the total global capacity. In the Middle East region, the lost capacities were about 147,000 tons/year, or about 8% of the total 1.9 million tons/year capacities. In India, meanwhile, about 5% of the total capacity is offline currently, which will fall to about 1% in April.
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