- Local PP offers captured mostly stable throughout March, except in the first week of the month
- Import offers become unworkable as local prices were lower
- Demand reported subdued due to manifold factors
As of March 1, an Indian PP producer informed SSESSMENTS.COM on adjusting down offers for PP across all grades by INR1,500/ton ($20/ton) and withdrew the price protection scheme. Following suit, traders also lowered their offers by the same amount. In the following week, the market was rather quiet as Indian players were away from their desks to celebrate Holi Festival on March 9 and 10. At the same time, local offers for PP Homo Raffia, PP Homo Film and PP Homo Injection remained unchanged as producers in the country announced price protection with effect from March 12. For the rest of the month, local offers for PP across all grades captured stable on a weekly comparison.
In the import market, SSESSMENTS.COM noted that import offers became less appealing as local offers were low and very competitive, therefore the demand for import cargoes were not too encouraging. On the week commencing March 9, import offers for PP Homo Raffia of Malaysia and Saudi origin were available at $940/ton and $1,000/ton respectively, on LC at sight, CIF India main port basis. And in the week after, the offers for PP Homo Raffia of Middle East origin stood at $920/ton on LC at sight, CIF India main port basis. Some players cited that those levels were deemed unworkable since the acceptable level should be equal to $870-880/ton-level in order to compete with local offers. Some others stated that in order to gain acceptance, import PP Homo Raffia offers should be around $840-850/ton on LC at sight, CIF India Main Port basis.
Demand-wise, SSESSMENTS.COM was told that buying sentiment for PP during March was weak due to manifold reasons. First, the market was sluggish due to the expectations of lower prices. Second, the sentiment was eroded by the slump in crude oil prices, depreciation of Rupee against the US Dollar, and the increasing confirmed cases of Coronavirus outbreak. Furthermore, to prevent the spread of the virus, the Indian government imposed a lockdown, which were enforced for 21 days from March 24.
Previously, restrictions were already imposed at ports, which required a 14-day quarantine for vessels coming from several countries including but not limited to China, Iran, Italy, South Korea, Japan, Singapore, Vietnam, Hong Kong, Macau, Thailand and Indonesia. After the government announced the lockdown, some Indian ports have declared force majeure. On the production sector, India’s Haldia Petrochemicals (HPL) has declared force majeure on supply and planned to shut the cracker complex amid the lockdown stemming from Coronavirus fears. According to SSESSMENTS.COM’s supply and demand database, Haldia’s HDPE and LLDPE plants have a production capacity of 345,000 tons/year and 365,000 tons/year, respectively.
For the outlook, Indian players contacted by SSESSMENTS.COM stated that the overall market is expected to remain muted in the upcoming month. Likewise, no transactions in the PP market are expected during the lockdown.
