- Import PP offers to India were scarce during May
- Domestic demand in India gradually recovered following lockdown relaxations
- PP prices have room to increase further
In the domestic market, Indian PP producers decided to roll over May delivery offers for most PP grades from April delivery’s level. However, considering the liquidity issue at buyers’ side, a local PP producer applied a special discount of INR2,000/ton ($27/ton) for all PP grades with effect from May 1, 2020, to help customers. While on May 14, the producer adjusted up local PP offers across all grades by INR1,000/ton ($13/ton). The offers received positive responses from buyers and deals were concluded at the same level to the initial offers between INR75,000-76,000/ton ($998-1,011/ton) on cash, EXW Bengaluru basis and excluding 18% GST. Local PP offers remained stable until the end of May. In the import market, SSESSMENTS.COM’s pricing database showed that in the first two weeks of May, fresh import PP offers were scarce as most buyers had no interest in buying import cargoes. While on the week commencing May 18, a global trading house achieved deals for Middle Eastern PP Homo Raffia cargoes at $800/ton on LC at sight, CIF Nhava Sheva Port. In the last week of May, offers for import Middle Eastern PP Homo Raffia were stable on a weekly comparison and stood between $830-850/ton on LC at sight, CIF India Main Port basis.
At the beginning of May, PP demand in India was sluggish as there were many regions labelled as red zones and remained under lockdown. However, as the crude oil prices have been rallying coupled with the stable prices in the Southeast Asia region, market sentiment and domestic demand in India recovered gradually. At the end of May, market players stated to SSESSMENTS.COM that demand for PP was between 50-60% from the normal demand before the lockdown. Moreover, after the Indian government announced lockdown relaxation in low-risk regions marked as green and orange zones, some factories have restarted the production activities. As such, the leading Indian petrochemical producer decided to allocate 60% of the total output to the domestic market after previously pushing 75% of its total PP allocation to the export market when India was under lockdown. Likewise, another PP producer in the country revealed that the company will also allocate all of the production volumes to the local market on the back of improvement in demand.
In the production sector, SSESSMENTS.COM noted that Mangalore Refinery and Petrochemicals Limited (MRPL)’s 440,000 tons/year PP plant located in Mangalore, Karnataka had been brought online on April 28. While Indian Oil Corporation Ltd (IOCL) also resumed production at the company’s 600,000 tons/year PP plant located in Panipat complex on the week commencing May 11.
Looking ahead, Indian market players opined to SSESSMENTS.COM that PP demand in the country will continue to improve in the days to come. As such, PP prices have room to increase further considering healthy demand coupled with the uptrend in crude oil and feedstock prices.
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