Lingering supply chain issues, bullish upstream markets and a drying up of import offers have kept prices of polyolefins in India on an upward course. PP and PE prices have been rising since the beginning of the year.
The Russia-Ukraine crisis has already had an impact on the market sentiment. Suppliers are holding back offers, waiting for prices to rise further on the back of surging feedstock costs, as crude oil prices continue to surge. Local sellers have continued to raise offers. What is more, buying interest has not waned despite the rally extending into the third month, with players sensing further upsides ahead.
“We hear the SWIFT blockade will result in some Russian banks facing difficulty initiating transactions even with the country’s allies. This will likely create issues for all importers of Russian products, particularly China and Turkey as well as some markets in Eastern Europe. This would mean these importers may look at Asian-origin polyolefins and other polymers, creating availability issues for India,” said a Mumbai-based trader.
Import PP, PE prices rise as offers dry up
Traders quoted homopolymer PP raffia import prices into India in a $1470-1510/ton CIF west-coast India range for March shipments, or about 4% higher than prices reported in early February.
Traders also reported import PE prices higher. Middle Eastern offers of LDPE were quoted in a $1650-1720/ton CIF range for March shipments, up $30-100/ton from around $1620/ton CIF reported in February. Both LLDPE and HDPE prices for March surged by more than $100/ton in a $1430-1470/ton CIF west-coast India range. These were earlier reported at $1310-1340/ton range.
“We are seeing few PP and PE offers lately as energy prices have continued to surge. A considerable section of suppliers are reporting paucity of material. If such a situation persists, domestic inventories could tighten further and prices could keep rising,” said another trader, part of a public-sector oil company in India. “The strength in upstream markets has also raised expectations of higher prices in the weeks ahead,” he added.
Upbeat sentiment in local market amid production issues
The bullish sentiment has also reflected in the latest prices posted by a major Indian producer for its PP and PE grades sold locally. The Indian major hiked prices of all grades of PP sold to the local markets by INR3000/ton ($40/ton) with effect from March 1. HDPE and LLDPE film domestic prices were also raised by the same amount, while LDPE prices were hiked by INR3500/ton ($46/ton).
The current increase in prices have coincided with reports of turnarounds and technical issues in Indian plants. ONGC Petro additions Limited (OPaL) has announced a turnaround for a month from April 1 at production facilities in its northern Indian complex, meanwhile. Apart from a dual feed cracker unit with a capacity to produce 1.1mn tons of ethylene and 400,000 tons of propylene, it has two 360,000 tons/year LLDPE/HDPE swing units and one 340,000 tons/year dedicated HDPE unit, apart from a 350,000 tons/year PP plant.
The Mumbai-based trader also said there was talk of HMEL, a public-private joint venture producer in India, facing issues with a PP injection moulding unit in northern India, but this could not be confirmed.
Supply tightness coincides with robust seasonal demand
As for the logistics, the container crunch in Asia continues to slow India’s import arrivals. “Cargoes that we booked in December have not arrived yet and this continues to crimp domestic supplies, especially of PP in the country,” another Indian trader said.
However, the trader expected considerable supplies to arrive around mid-April, which are imports booked in early January, or slightly earlier, at much lower prices. “That should ease the tightness in the market,” he added.
The supply-side issues in the market have come at a time when demand seasonally is set to increase ahead of the June-August monsoon rainy season. As inventory levels are currently not too high, market players are looking to buy even ahead of the financial year-end on March 31, slightly ahead of which they typically resort to a paring down of stocks.
