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India’s import PP, PE markets rebound in Jan after several months of declines

by Shibu Itty Kuttickal -
  • 26/01/2023 (10:50)
Import prices of PP and PE in India have risen from previous month’s levels as tightness in supplies, which has resulted in oversold positions, has prevailed over buyer resistance. Indian traders expect the bullishness to continue in the near term, riding on the easing of COVID curbs in China and the infrastructure sops expected in the Indian budget ahead.

Traders said polyolefin supplies to most Asian import markets have tightened and this was affecting availability to India as well. “There is discernible tightness in import supplies of PP and PE in the Indian markets, and this is, of course, a reflection of the squeeze that’s being felt across the Asian markets. We are seeing considerable number of producers noting oversold positions,” said a major polyolefins trader based in Mumbai.

“Chinese demand is strengthening as a result of the end of COVID curbs, and this is bound to reduce supplies to Asian markets and is already putting pressure on Middle Eastern supplies as well. That would be net bullish for Indian import values,” he added. At the same time, he also pointed to the Indian budget expected in February which is expected to announce additional funds for rural infrastructure projects, which would also be a positive for polymers.

All polyolefin prices see increases

Import PP prices in India that stayed on a downtrend for five months in a row have rebounded in January in line with the rise in other Asian markets. Prices of homopolymer PP raffia are currently reported in a $980-1030/ton range CIF India, up from the $950-1000/ton CIF levels noted about a month ago. Prices are still about 23% lower than levels noted in July 2022.

As far as PE markets are concerned, import prices of HDPE film were noted in a $1050-1110/ton CIF India range, compared to the previous month’s levels of $1040-1100/ton CIF. LDPE film prices, which were mostly around $1100/ton in the previous month, are currently noted at $1120-1150/ton, while LLDPE film is at $1060-1120/ton CIF, from $1040-1100/ton previously.

A prudent buying strategy

Another Indian trader, however, added that buyers haven’t gone overboard to mop up availabilities. “We’re perhaps seeing a prudent buying strategy currently. Players don’t want to be caught with inventories at unmanageably high prices. At the same time, they don’t want to miss out in the event of a rising trend. The direction may still not be clear. The COVID situation in China as well as the upcoming Indian national budget could both have a bearing on what’s in store for the polyolefin markets in the near term,” he said.

“We’ve seen an overall improvement in the market sentiment over the last one month. Prices have certainly increased. And the increases have been gradual, rather than steep hikes, which perhaps point to an uptrend for a longer period,” a source at an Indian producer said.

Chinese developments a major factor

A major factor currently going for Asian markets for PP and PE is the strengthening of demand in China following the lifting of most COVID restrictions. China’s reopening is set to fuel demand surges for commodities as well as consumer goods in both China and its Asian neighbours and lift polymer prices as well.

The rising uptakes is expected to reduce exportable surpluses in China and import availabilities for Asian markets, including in India.

All eyes on the Indian budget

Meanwhile, Indian economists and analysts have agreed the key areas of focus in the upcoming Union Budget 2023 are likely to be infrastructure and rural development. Some estimates point to spending towards agricultural and rural growth to be raised by US$10 billion, or a growth of about 15% over the previous fiscal year. This would mean more funds being allocated to rural roads, housing, irrigation infrastructure etc.

“All this points to a better year ahead for PP, PE and PVC,” the source at the producer said.
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