India PP, PE markets rise amid tightening supplies, better local sentiment

Import polyolefin prices in India have risen over the past few weeks as regional turnarounds tightened supply, while improved sentiment in the local market drove domestic prices higher, market participants said. The increase in import prices followed a boost in buying sentiment, which lifted domestic prices by INR6000-8000/ton ($69-92/ton) over the last couple of months.

“We’ve seen increasing buying activity in the PE and PP markets over the past three to four weeks. Prices have risen by INR6-8/kg over the last one and a half to two months. Local prices have continued to rise incrementally on a weekly basis as concerns over supply constraints have supported a positive market outlook,” a source in the polyolefins market in western India said.

“Stronger buying activity in the domestic markets has rubbed off on the import markets too,” said a trader based in Mumbai.

Turnarounds spur buying in India

Market indicators suggest rising import polyolefin prices in India, driven by supply constraints due to regional turnarounds. Market players are also pinning hopes on the upcoming national budget, set for release on February 1, for further demand recovery.

“Polyolefin plants at Numaligarh Refinery in northeastern India, as well as Reliance’s Jamnagar and HMEL’s Bhatinda refineries in northwestern India, are undergoing various stages of maintenance shutdowns. Additionally, ONGC Petro Additions Ltd (OPaL) in Dahej may soon shut down for maintenance,” a Delhi-based trader reported.

Meanwhile, players are closely monitoring the potential impact of Borouge’s planned shutdown of a major PE plant in Abu Dhabi, which could further limit supply to India. As a result, Middle Eastern suppliers have raised their February offers, with buyer feedback still pending.

Import markets higher from previous month

Data from ChemOrbis Price Index indicate that India’s polyolefin markets have traded higher over the past month.

For Middle Eastern origins, LDPE film prices rose by $20-30/ton from late December levels to $1100-1150/ton, while LLDPE film climbed by $20/ton to $935-975/ton. HDPE film prices also increased by $10/ton to $930-970/ton, all on a CIF India basis.

Import PP raffia prices were also higher from the last week of the previous year at $950-980/ton CIF, cash. Traders, however, pointed to a war of attrition between buyers and sellers on PP raffia, with selling indications mostly at $980-1000/ton while buying ideas were all below the $990/ton mark.

“Saudi offers have mostly been above $980/ton, which buyers have resisted. Deals have been limited,” a Mumbai-based trader said. “However, sellers are holding firm, and buyers may eventually accept higher prices as demand improves in the domestic market,” he added.

Govt doubles down on infrastructure spending in budget

Apart from the squeeze on supplies, traders point to the Indian government’s continued focus on infrastructure spending in the February 1 budget as a potential catalyst for polyolefin demand. The allocation of INR11.5 trillion ($132 billion) for capital expenditure underscores a commitment to using infrastructure investment to drive economic recovery, employment, and private sector participation.

However, the market remains uncertain about whether this move will provide sustained support for polyolefin prices.

“While increased capital expenditure is promising, its impact on PP and PE prices depends on how quickly funds are allocated and projects commence. We expect the typical increases in the first quarter to continue at least till mid-March, but we still need to see actual spending and tenders coming out for projects ahead before we can see a sustainable increase in prices,” a trader noted.

Traders also pointed to domestic producers raising local prices and taking away volume discounts offered.

“Producers in India have raised local prices, and most have taken away volume discounts. The next pricing from Middle East producers also indicates higher import levels, as they have also seen a better sentiment for polyolefins in India. There’s also a general expectation that the budget ahead could be bullish for the polymer markets in general,” a trader commented. “We may see higher capital investment in water supply, metro systems, and climate-resilient infrastructure, along with good allocations for smart cities, and housing for low-income groups,” he added.