India’s import PP and PE markets fall as monsoon strengthens

After two months of rising prices, downward pressure on polyolefin prices has returned to the Indian markets, as freight rates have fallen, and monsoon rains have strengthened appreciably. Torrential rains across the Indian subcontinent have led to flash floods and landslides that caused damages to infrastructure as well as loss of lives.

Lower freight rates and monsoon hit polyolefin prices

While the southwest monsoon began with an 11% rainfall deficit in June, subsequent months saw excess rainfall in central and southern regions, despite shortages in the northwest and eastern parts, according to the Indian Meteorological Department (IMD).

Central India, which started with a 13% rainfall deficit in June, saw a 21% surplus in July. Similarly, southern India experienced a 25% increase in rainfall, leading to severe flooding in Kerala, resulting in nearly 400 deaths and extensive damage.

In early July, a supply squeeze caused by a sharp surge in freight rates because of a container shortage in northeastern Asia made trading polyolefins difficult. Sellers raised prices while buyers sulked. However, a drastic fall in freight rates during the month led to price reductions, even as demand stayed stagnant during the monsoon months.

With continuous heavy rains in southern and central India, traders and downstream consumers of PP and PE delayed purchases, anticipating further price declines. This sentiment persisted as downstream demand remained weak.

PP raffia prices fall by about $40/t

Traders noted a $40-45/ton decline in homo-PP raffia and injection offers for Middle Eastern origins over the past month. The workable price range is noted to have fallen below the $1000/ton mark to a $990-1015/ton CIF India levels.

“The decrease in freight rates has certainly hit PP prices this month. At the same time, there’s a general negative impact of the monsoon on polymers that is seen in PP prices too,” a trader said. According to the trader, buyers could also look at the Chinese market, which continues to have surplus material to export. Another trader, however, said the outlook cannot be that bleak as there could be a revival in demand after the monsoon season, possibly starting in early September.

Monsoon cools LDPE film rally

LDPE film offers, which were heard as high as $1300/ton CIF India in early July, fell to the low $1200s/ton in early August, mostly because of the monsoon rains that kept demand weak in the country, especially after the end of the freight rally in early July. Tradable levels in the high-$1200s/ton that were reported in early July, are currently down to a $1220-1250/ton CIF India levels.

“Buying interest for LDPE has certainly cooled, with even the low ends not seeing a lot of buying activity,” said a trader based in Mumbai. “There doesn’t seem to be any concern at stocks falling, possibly because not many are seeing an imminent demand surge from downstream players,” he added.

LLDPE film falls below the $1000/ton CIF mark

As for LLDPE film, pricing indications were heard mostly below the $1000/ton CIF India mark, with the market seeing the impact of sluggish demand because of the monsoon. Firmer demand and better sentiment, aided also by the surging freights last month, had seen prices rising above the $1000/ton mark, but the latest month has seen prices tapering down because of the torrential rains.

“The monsoon season has definitely led to bearishness around LLDPE,” a Delhi-based Indian PE trader said. “People had booked sizable quantities in June, but heavy rains have meant lower uptakes and falling prices,” he added.

This sentiment has meant buyers kept on waiting for lower prices. An expected mid-July demand revival for the post-monsoon demand did not happen because of the strengthening of the monsoon. Moreover, Indian buyers had enough local sources to meet their requirements.

HDPE film prices down $30-45/t from a month ago

Mid-Eastern HDPE film prices have seen a $30-45/ton fall from levels in early July, with sluggish demand for pipes, especially for agricultural purposes, during the monsoon. “Inventories have fallen with distributors in India because of being away from the market for a long time but there’s enough stocks with pipe manufacturers and this has kept prices at lower levels,” a major pipe manufacturer in southern India said.

Traders noted that falling freight rates had initially raised buyer interest last month, but this cooled as strong monsoon rains decreased demand over the past month.

Trading indications from different sources pointed to HDPE film being noted currently at $970-1010/ton, from a $1015-1040/ton range a month ago. Domestic players said the bearish market for HDPE may continue at least till the end of August.