India’s PP, PE prices rise amid squeeze in Mid-East supplies

Earlier expectations of stronger PP and PE markets have come true in India recently, amid a procurement season in the first quarter coupled with Middle East turnarounds crimping availability of import shipments and surging freight rates. An Indian import quality certification that was put in place from early January may also tighten availabilities for import PE grades.

Following the yearly jump of 36% in PP and 90% in PE imports , as per ChemOrbis Stats Wizard suggests, in the first three quarters of last year, players expect PP and PE import volumes to have risen by at least 30% year-on-year in the last quarter of 2023. Nevertheless, this smooth import flow is likely to be disturbed in Q1 this year as reduced availability from Middle Eastern producers – driven by the turnarounds and freight increases - have squeezed availability to the Indian markets lately, traders said.

The current quarter is historically a high-demand season for polymer imports to India, as converters stock up raw material ahead of the monsoon season starting in June. Allocations for infrastructure projects are also expected to increase in the annual budget for the 2024-’25 fiscal year, which is slated to be revealed next month, prior to the elections to India’s parliament expected to be held in April/May. “We may see a further increase in sales and imports if the incumbent government is ushered back to power,” said a Delhi-based polymer trader.

Concerns of reduced supplies buoy sentiment amid quality certification, Mid-East turnarounds

Traders said pricing indications rose after the government implemented a Bureau of Indian Standards (BIS) import certification requirement for PE material, which effectively checked the circulation and trading of low-quality PE material into the country.

Not only the import certification, but also reduced Middle Eastern volumes have contributed to the bullish sentiment. Ongoing or impending shutdowns at Mid-Eastern producers will likely keep import availability of PP and PE tighter for February and March.

As for PP, Advanced Petrochemical, Al-Waha and Petro Rabigh are among the major Saudi Arabian companies that plan turnarounds later this month or in February while the UAE’s Borouge is also said to be conducting partial maintenance. PE markets have also been facing reduced supplies amid reduced output from Qatar’s Qapco, Saudi Sharq and Israel’s Carmel.

According to ChemOrbis Stats Wizard, India conducted 61% of its PP imports from the Middle East in January-October 2023, with the UAE and Saudi Arabia holding a chunky part of it with respective shares of 29% and 24%. India’s PE markets also paint a similar picture in terms of dependence on the Middle East as the 56% of overall imports was made from the region with the UAE holding a 27% share and Saudi Arabia 14% share. That is to say, disrupted supply flow from these producers will directly impact the Indian market.

LDPE regains premium over LL, HD

The latest numbers showed LDPE film prices had wrested back the premium that the grade enjoyed about a year ago, as they rose by a larger margin than the LL and HD grades over the last month. HDPE film had mostly claimed a premium over the other two film grades for most of the previous year.

LDPE film prices, which were trading at $970-1000/ton CIF India levels in early December, are currently reported by market participants in a $1060-1090/ton range. There was reportedly a lack of clarity on the latest BIS certification norms, but a Delhi-based trader said LDPE demand “has certainly strengthened”.

HDPE film prices were reported in a $1000-1025/ton CIF India range, compared to the $990-1010/ton CIF levels reported slightly more than a month ago. Meanwhile, LLDPE film prices were quoted slightly higher at $960-970/ton CIF India, from the mid-$900s/ton CIF India noted in early December last year. Market participants expect the prices to continue increasing in the weeks ahead.

PP prices also rising

PP raffia prices were reported in a $975-995/ton CIF India range, up from the low-$900s/ton levels noted in early December.

“Availability of import PP has been limited while demand has strengthened in India. The tensions in the Red Sea have also helped to boost the market sentiment, apart from the delay in shipments,” the Mumbai-based trader added.