- Indian PE prices found momentum to rebound in May
- Tight supply and logistic disruption were reported as the impact of coronavirus lockdown
- Firm feedstock prices expected to lend support to PE prices
During Q2 2020, India PE market showed a recovery process after being severely battered by COVID-19. In April, SSESSMENTS.COM noted that there were no single deals concluded in the market. As the government extended the lockdown, India PE markets were on mute. Buyers were uninterested in procuring materials, although the leading Indian petrochemical made a price reduction twice in April. With effect from April 1, the leading Indian petrochemical producer reduced the offers by INR1,000/ton ($13/ton) for HDPE Film and INR2,000/ton ($26/ton) for LLDPE Film C4. Further downward adjustment captured on April 10. Offers for HDPE Film, LDPE Film, and LLDPE Film C4 decreased by INR3,000/ton ($40/ton), INR2,500/ton ($33/ton), and INR4,000/ton ($53/ton) respectively.
The downtrend prolonged to May. With effect from May 1, the leading Indian petrochemical producer adjusted down the offers for HDPE Blow Moulding and LDPE Film by INR3,000/ton ($40/ton). While for LLDPE Film C4, the offers were trimmed by INR2,000/ton ($26/ton). By the third week of May, India PE prices found its momentum to rebound. With effect from May 21, the leading Indian petrochemical producer increased the offers for HDPE Film by INR1,000/ton ($13/ton) and INR2,000/ton ($27/ton) for LDPE Film and LLDPE Film C4. Within the last week of the month, SSESSMENTS.COM noted that local LLDPE Film C4 offers increased by INR2,000/ton ($27/ton) as compared to a week earlier. Similarly, localized Middle Eastern HDPE Film and LDPE Film offers were also up between INR2,000-3,000/ton ($27-40/ton) and by INR3,000/ton ($40/ton) respectively compared to the same period.
In June, the healthy demand amidst the limited supply supported PE prices to be on an uptrend throughout the month. With effect from June 1, the leading Indian petrochemical producer increased the offers for HDPE Blow Moulding, HDPE Film, HDPE Yarn, and LDPE Film by INR1,000/ton ($13/ton). For LLDPE Film C4, the offers increased by INR2,000/ton ($26/ton). However, a local manufacturer revealed to SSESSMENTS.COM that the actual offers from the producer only increased around INR1,500/ton ($20/ton) after the discounts. Moving to the week commencing June 8, the producer increased offers further by INR2,000/ton ($26/ton) for HDPE Blow Moulding and INR1,000/ton ($13/ton) for HDPE Film, LDPE Film, and LLDPE Film C4. From the traders’ end, on June 10, offers for local LLDPE Film C4 captured increased between INR1,000-2,000/ton ($13-26/ton) on a weekly comparison. In the third week of the month, some local traders increased PE offers across all grades between INR1,000-2,000/ton ($13-26/ton) as compared to the offers announced a week earlier.
In the import market, import PE prices in May were hovering around $700/ton-level. Middle Eastern HDPE Film and LLDPE Film C4 cargoes were available at $720/ton and $730/ton respectively. While US HDPE Film cargoes were available at $700/ton. In the final week of April, offers for Saudi HDPE Film emerged with a reduction of $40/ton as compared to the offers available in early April. In May, within the week commencing May 4, US HDPE Film surfaced with increases of $30-40/ton on week-on-week comparison, recorded at $740/ton. Moving to the second week of May, US HDPE Film offers increased further by $50-60/ton on biweekly comparison with the shipment from Taiwan. On the week commencing May 18, US HDPE Film offers increased further by $30/ton on a weekly comparison. Likewise, offers for LDPE Film cargoes of United Arab Emirates origin were up between $20-40/ton during the same timeframe, as noted by SSESSMENTS.COM.
In the first week of June, the leading Saudi polyolefins producer made a significant upward price adjustment of $80/ton for HDPE Film and $60/ton for LDPE Film as compared to a week earlier. For LLDPE Film C4, the offers were available at $800/ton, no price comparison available. Speaking of feedback, SSESSMENTS.COM was told that the offers were deemed unworkable as India PE market has yet to completely recover from the Coronavirus impact. In the final week of the month, July shipment offers for Saudi and Qatari LDPE Film surfaced with increases of between $40-50/ton on the monthly comparison. All import offers on LC at sight, CIF India Main Port basis.
In early Q2 2020, India PE market was muted due to coronavirus lockdown, which imposed since March 25. However, starting from April 20, the Indian government allowed some factories in green zone areas (areas with no confirmed cases for 21 consecutive days) to resume production in order to revive the economic activities. A slight improvement in demand for PE resins captured on the third week of May as most businesses in low-risk areas allowed to resume production under safety guidelines. In June, SSESSMENTS.COM noted that demand was satisfactory with the food packaging sector as the main contributor. During this time, the strongest demand was captured for LLDPE Film C4 as all sectors were doing good, especially inner packaging. Whereas robust demand for hand sanitizer bottles supported demand for HDPE Blow Moulding. Other than that, demand for HDPE Pipe also started to improve.
On the production front, GAIL Ltd had shut its two HDPE units located in Pata, India with a capacity of 100,000 tons/year each in April. Likewise, IOCL also shut the company’s 200,000 tons/year ethylene line amid the lockdown. The producer reported resuming the production at the company’s 300,000 tons/year HDPE plant located in Panipat complex within the week commencing May 11. Haldia Petrochemicals Ltd (HPL) shut its cracker and polymer plants following the lockdown imposed by the government. At the final week of April, HPL was reportedly running at 70% of total capacity. From the converters’ end, SSESSMENTS.COM was told that in April, the production activity was only running at 20-30% from the total output. On the supply front, tightness was reported in the second and third week of June. In the second week of June, the availability of HDPE grades was the least among other PE grades since only the leading Indian petrochemical producer had some quantities to offer to the market. Other local producers reported having no stocks. In the third week of June, the delivery of materials was not normal yet since the coronavirus cases in the country remained high.
Looking into Q3 2020, Indian market players foresee that the firm feedstock prices will provide a cushion for PE prices from a downward price adjustment. Although monsoon season has started to drench some parts of India, the firm monomer prices would lend support to prices. Demand-wise, buying sentiment is predicted to weaken by the monsoon season, as stated to SSESSMENTS.COM.
