Skip to content




Markets

Asia Pacific

  • Africa

  • Egypt
  • Africa
  • (Algeria, Tunisia, Libya, Morocco, Nigeria, Kenya, Tanzania, South Africa)

Filter Options
Text :
Search Criteria :
Territory/Country :
Product Group/Product :
News Type :
My Favorites:
 

India’s PP, PE trading hits impasse amid high costs, weak demand

by Shibu Itty Kuttickal - sikuttickal@chemorbis.com
  • 27/04/2022 (08:17)
A double whammy of high costs and weak demand has hit sentiment in the Indian PE and PP markets, traders said.

“Producers can’t sell any lower than what they have so far as they have high costs to consider, while buyers insist prices have to slide further. Meanwhile, converters say the current end-user demand does not justify the high prices they are being asked to pay,” said a trading manager with a public sector oil company in India.

“It looks like a deadlock. There are very few actual trades happening at least from what we are seeing. It’s an unusually silent market,” he added.

China’s exportable surpluses loom large

Traders also pointed out that the situation elsewhere also was somewhat the same. “Expectations across geographies point to stable and soft markets. Meanwhile, we expect ample exportable surpluses of both PP and PE from China to continue hitting markets in Asia and elsewhere as the COVID situation keeps major cities in the country under lockdowns,” said a source at a major producer in India.

“We could’ve already seen a few Chinese cargoes of PE booked for sailing to India and could reach in May, perhaps even PP too. But prices and other details have been kept too confidential and they’re still not out in the market,” he said.

Cost factor deters price cuts

But costs have been a major deterrent for prices not being cut too much. “We have seen a big escalation in costs at least since the beginning of the calendar year,” the source said. “If we don’t pass the higher costs to our customers, our bottom line would be hit.”

Oil prices have now risen by more than a third of the level they were at the end of 2021. Ethylene prices resisted the oil surge earlier, but ChemOrbis Price Wizard shows they have since gained gradually and is currently trading at about $1260/ton CFR China, or about 21% higher than they were at the end of 2021. Propylene saw a peak of $1280/ton CFR China in the first week of March, and has since slid to $1140/ton CFR, but still about 13% higher than they were in the last year end.

Buyers expect PP, PE prices to go further down

On the contrary, PPH raffia and injection prices have slid by more than $150/ton to mostly below the mid-$1300s/ton CIF for end-April to May delivery cargoes currently. “I’d think import raffia prices need to go below $1300/ton CIF for them to be acceptable,” said a Mumbai-based trader.

PE continues to outperform PP

But PE markets are not as weak as PP. He also did not expect takers for current offers mostly in the low-$1400s/ton for HDPE and LLDPE film. “But shutdowns in major PE plants in the country have squeezed local availability, which has opened up the local market to import cargoes,” he said.

LDPE prices are being quoted in the high $1600s/ton CIF but traders said they might have to be reduced too.

Ramadan observance keeps players at bay

Apart from the current downbeat sentiment, the market has also been affected by the Islamic fasting month of Ramadan, with a section away from trading and preparing for the Eid holidays next week.
Free Trial
Member Login