Market and product

Polyolefin prices in India may halt their almost steady increase since early June, with buying sentiment weighed down by uncertainties in the upstream crude market in the near term, industry players said on Thursday.

Most market players in the country have covered their inventory requirements in recent weeks, limiting discussions for August shipments.

Suppliers from the Gulf Cooperation (GCC) have yet to quote actual offers for both polyethylene (PE) and polypropylene (PP) to the Indian market.

On 15 July, HDPE prices were assessed at $1,150-1,170/tonne CFR India, up $10/tonne from the previous week; while PP raffia stood at $1,040-1,060/tonne CFR India, up $10-20/tonne over the same period, according to ICIS data.

Crude prices continued to be volatile. At midday, Brent crude for September delivery was trading at $47.40/bbl, while US crude was at $45.94/bbl.

For all high density polyethylene HDPE grades, selling indications were circulating in the market at $1,170/tonne CFR (cost and freight) India or higher. Those for low density PE (LDPE) film and linear low density PE (LLDPE) film were at above $1,200/tonne CFR India.

Acceptable PE buying levels, however, were capped at below $1,200/tonne CFR India, market sources said.

For PP, deals last week were concluded at $1,040/tonne CFR India, with offers at $1,060/tonne CFR India.

PP importers in India have adopted a wait-and-see stance, following sharp declines in China’s futures market.

PE and PP prices have been stable-to-firm since early June, buoyed by scarce availability of cargoes from the Middle East.

Suppliers have been raising offers for June and July because of the limited stocks following months of robust demand.

In the Indian domestic market, polyolefin prices have also been rising, tracking import values. Limited import volumes prompted buyers to seek domestic cargoes, nudging up domestic prices.

Most GCC-based polyolefin producers also assumed a bullish stance for August. According to these makers, inventories among most regional producers remains largely limited following good demand in July, and this could lend support to a possible hike in August offers.

“There is no pressure to sell, even for August, since we sold more than our allocation to some markets in July and this situation will be reflected in the prices for August,” a GCC-based PP producer said.

Market players were expecting major suppliers to announce a $10-20/tonne price hike next week, but buyers may pose a strong resistance to higher prices since there is no marked improvement in demand.

“Demand … has really not changed much in the last few months, so it has become difficult to pass on the price increase to downstream markets,” an Indian buyer said.

Any further increase in domestic prices is also likely to be resisted because there was no corresponding improvement in downstream demand to support it, the buyer said.

In the key PE markets of southeast Asia, import discussions have also softened during the week, with buyers opting to wait for more offers before kicking off negotiations with suppliers.

A further price hike for August is likely to be resisted in view of weaker upstream values and stable demand, market players said.

PP prices in southeast Asia, on the other hand, continued to edge up but most importers took the the sidelines to wait for fresh August offers from Middle Eastern suppliers.