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India’s PP, PE markets wait for buyers to return as monsoon ends

by Shibu Itty Kuttickal - sikuttickal@chemorbis.com
  • 02/10/2024 (09:47)
Despite the official end of India’s Southwest monsoon, PP and PE import buyers remain cautious, holding back purchases as above-average rains are predicted to continue into October. At the same time, market players have noted slightly higher offers lately, on expectations of buying activity increasing in the post-monsoon season.

A section of the market has predicted the return of buyers shortly, with the copious rains received during the June-September monsoon expected to have yielded good crops, improving the purchasing power of the rural community.

Monsoon season has ended but rains persist

India’s monsoon season officially concluded on September 30, according to the India Meteorological Department (IMD). The country experienced 8% more rainfall than average during the June-September period, the highest since 2020, with total rainfall at 934.8 mm compared to the seasonal norm of 868.6 mm.

At the same time, the monsoon has not fully withdrawn from the country, with experts expecting heavy rains to persist in the eastern and northeastern states for another two weeks. The monsoon’s full retreat is predicted by October 10, which could potentially worsen flood conditions. In parts of Southern India too, strong rains are being reported even at the time of writing.

LD film softens but high ends up for HD, LL film

As far as PE is concerned, LDPE film prices have seen a slight decline over the past one month, but both HDPE and LLDPE film prices have seen an increase in high-end prices over the same period. The ChemOrbis Price Wizard shows LDPE prices falling by $5/ton at the low end while staying flat at the high end since the first week of September. ChemOrbis Price Wizard shows LDPE prices have fallen by about 13% since early August.

At the same time, HDPE and LLDPE film prices have stayed flat at the low ends but risen by $10/ton at the high end over the past one month. The HDPE and LLDPE film grades have fallen by 6-7% since early August.

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Downstream demand remains in the doldrums

Demand in the downstream sectors has stayed weak as converters kept pointing to the incessant rains. Several parts of northern India have faced severe flood situations following heavy rainfall and subsequent breach of water levels from rivers. The water levels in multiple rivers across the country have risen. Such a situation typically leads to lower sales of plastics and falling production rates at downstream polymer plants.

“We haven’t seen a pickup in demand for PP and PE downstream. Players are still cautious due to the ongoing rains, even though the weather office has declared the monsoon’s retreat. Low-pressure systems have developed across India, extending the rainy season, and this has kept converters waiting in the sidelines. We expect buying interest from converters to return only when they are convinced of better uptakes of their end-products,” said an Indian trader based in New Delhi.

Sellers see buyers returning, raise HD, LL prices

LDPE film has been the most affected by the prevailing bearishness, with prices currently noted at $1100-1130/ton, from $1105-1135/ton a month ago. Traders pointed to adequate volumes of LDPE available for trading, which has continued to put pressure on prices.

At the same time, players said the likelihood of buyers returning post-monsoon has slightly improved the selling sentiment in the HDPE and LLDPE film markets. “Sellers have raised offers of both HDPE and LLDPE film. We see demand for HDPE pipes rising shortly as the monsoon ended. And, LLDPE film supply is still tighter than the other two grades. The ongoing rains are not likely to continue for long and buyers should return shortly to stock up for demand ahead,” a trader said.

The post-monsoon season also typically sees higher spending by the government on infrastructure projects. “We may see a revival in sales if players return to buy, particularly if there are clear signs of government spending on infrastructure increasing,” he added.
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