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QuarterlySSESSMENTS: Q2 2020 India PP Prices

Author: SSESSMENTS

  • Limited local and import offers recorded in April due to nationwide lockdown
  • Gradual improvement in demand was recorded since the second week of May
  • Sources voiced out the opposite outlook for demand and pricing

By the first month of Q2 2020, SSESSMENTS.COM noted that the leading Indian petrochemical producer reduced PP Homopolymers and PP Random Copolymer offers by INR3,000/ton ($40/ton) and INR2,000/ton ($27/ton) respectively with effect from April 1 and withdrew the price protection announced previously. As informed by market sources, both local and import offers in April were limited as most players were uninterested in checking the offers due to nationwide lockdown amid Coronavirus outbreak. Sources added that although there were still some trading activities in the market, those were very small and only for selected buyers. Further added, sources informed that on April 22, India’s Mangalore Refinery and Petrochemical Limited opened a tender for 5,000 tons of PP Homo Raffia and 3,000 tons of PP Homo Injection for the second half of May shipment and targeted South Asia market considering the tight supply in the region. Moving to May, Indian PP producers rolled over May delivery offers for most PP grades compared to April delivery offers. However, a local PP producer applied a special discount of INR2,000/ton ($27/ton) for all PP grades which was valid from May 1 until May 31, 2020, in order to help customers in the midst of the liquidity issues at their side. However, on May 14, the producer decided to increase local offers for PP cargoes across all grades by INR1,000/ton ($13/ton). Sources stated that started from the week commencing May 18, local offers were deemed attractive and some deals were recorded. As such, local offers for PP were kept stable by the remaining of May. 

Entering June, the leading Indian petrochemical producer increased PP Homo Raffia and PP Homo Injection offers by INR3,000/ton ($40/ton) with effect from June 1, 2020. Likewise, another Indian producer also initiated an increment of INR3,200/ton ($43/ton) for local PP Homo Raffia offers with effect from June 1, 2020. As explained to SSESSMENTS.COM, the upward adjustments made by the local producers were supported by the stronger crude oil and monomer prices. In the second week of June, local PP offers were kept stable from the prior week. However, local PP producers in India were expected to increase further PP offers by INR2,000/ton ($27/ton) within the week taking into account the healthy demand amid limited supply. In line with the expectation, the leading Indian petrochemical producer increased PP Homo Raffia offers by INR2,000/ton ($27/ton) and by INR2,500/ton ($33/ton) for PP Homo Injection and PP Random Copolymer, with effect from June 11. By the following week, local PP offers across all grades from the traders’ side were also adjusted higher by INR2,000/ton ($27/ton) on a weekly comparison. On the week commencing June 22, local PP offers were kept stable from a week earlier.

From the import market, May shipment offers for import PP cargoes from a Saudi producer were recorded between $880-1,010/ton. While in May, SSESSMENTS.COM’s pricing database showed that import PP offers were scarce in the first two weeks of the month as most buyers were uninterested in purchasing import cargoes. By the week commencing May 18, import PP Homo Raffia cargoes from the Middle East were recorded at $800/ton. And by the final week of May, sources reported that offers for the same product were kept stable on a weekly comparison and stood at $830-850/ton. In June, a global trading house offered import Middle Eastern PP Homo Raffia cargoes at $70/ton higher on the monthly comparison, available between $940-950/ton. However, the offers were deemed unworkable as local PP Homo Raffia offers were more competitive. Market sources also informed that July shipment offers for South African PP Homo Raffia at $900/ton were no longer valid, hence, buyers preferred to source from local. All offers on LC at sight, CIF/CFR Main Port basis.  

In April, PP market in the country was muted due to the coronavirus nationwide lockdown from March 25 until May 3. Coming to May, demand remained slow as there were still a lot of regions labelled as red zones and the lockdown in that area was extended. Nevertheless, the stronger crude oil prices stimulated the market sentiment and the demand was gradually improving starting from the second week of the month. By the end of May, PP demand in India reached 50-60% from the normal demand before the lockdown. Market sources added that the demand for PP continued to increase until June as the government relaxed restrictions in low-risk containment areas and allowed more businesses and educational institutions to resume activity starting from June 8 by following the safety and health guidelines for COVID-19. Whereas the lockdown in high-risk containment areas marked as red zoned was extended until June 30. As most buyers already finished the replenishment activity, a slight decrease in PP demand was recorded by the third week of June. And by the following week, the government decided to reimpose lockdown in several areas as coronavirus cases in the country continued to increase, although the lockdown will not affect the industries significantly as citizens were still allowed to go to work. Despite the reimpose lockdown, PP demand by the third week and the fourth week of June was still considered healthy, SSESSMENTS.COM was told. 

On the supply side, market sources informed SSESSMENTS.COM that most of the Indian PP producers were in short supply on the week commencing June 8. During the same timeframe, sources also reported a disruption in the delivery of materials. While in the production side, Indian Oil Corporation Ltd (IOCL) has chosen LyondellBadell’s Sheriphol technology for its new polypropylene (PP) plant that will be built in Panipat, Haryana State, India with a capacity of 450,000 tons/year. 

Pertaining to the outlook, Indian market players expressed an opinion to SSESSMENTS.COM that import PP offers in Q3 2020 will most likely be firm. However, sources are questioning whether the offers will be workable or not, considering the competitive local prices. While for the demand, most players predict that market sentiment in India will soften following the re-implementation of lockdown in several areas.

Range of local PP transactions in April on cash, EXW basis, excluding 18% GST in all terms

OriginProductTransaction TypeOffers (INR/ton)Equivalent in USD/tonDelivery Location
IndiaPP Homo InjectionOffer Given72,000-73,000967-981Bengaluru
IndiaPP Homo RaffiaOffer Given72,000-73,000967-981Bengaluru
IndiaPP Homo RaffiaOffer Received70,000940Mumbai

Range of import PP transactions in April on LC at sight, CIF/CFR India Main Port basis

OriginProductTransaction TypeOffers (USD/ton)
SaudiPP Homo FilmOffer Received900
SaudiPP Homo InjectionOffer Received890
OmanPP Homo RaffiaSold720
SaudiPP Homo RaffiaOffer Received880
VietnamPP Homo RaffiaOffer Received790
SaudiPP Random Copolymer InjectionOffer Received1,010

Range of local/localized PP transactions in May on cash, EXW basis, excluding 18% GST in all terms

OriginProductTransaction TypeOffers (INR/ton)Equivalent in USD/tonDelivery Location
IndiaPP Homo InjectionOffer Given72,000-76,000967-1,021Bengaluru
IndiaPP Homo InjectionSold75,000-76,0001,007-1,021Bengaluru
IndiaPP Homo RaffiaOffer Given72,000-76,000967-1,021Bengaluru
IndiaPP Homo RaffiaSold75,000-76,0001,007-1,021Bengaluru
IndiaPP Homo RaffiaOffer Given67,500-68,000907-913Ahmedabad
IndiaPP Homo RaffiaOffer Given68,000-73,000913-981Mumbai
IndiaPP Homo RaffiaSold69,000927Mumbai
SaudiPP Homo RaffiaOffer Given65,000-67,000873-900Mumbai

Range of import PP transactions in May on LC at sight, CIF/CFR India Main Port basis

OriginProductTransaction TypeOffers (USD/ton)
Middle EastPP Homo RaffiaOffer Given780-850
Middle EastPP Homo RaffiaOffer Received890
Middle EastPP Homo RaffiaSell Idea780-830
Middle EastPP Homo RaffiaSold800

Range of local/localized PP transactions in June on cash, EXW basis, excluding 18% GST in all terms

OriginProductTransaction TypeOffers (INR/ton)Equivalent in USD/tonDelivery TermDelivery Location
IndiaPP Block CopolymerOffer Given76,000-77,0001,021-1,034EXWMumbai
IndiaPP Homo FilmPrice List79,4001,067EXWKanpur
IndiaPP Homo FilmOffer Given74,000-76,000994-1,021EXWMumbai
IndiaPP Homo FilmSold75,500-76,5001,015-1,028EXWMumbai
IndiaPP Homo InjectionOffer Given72,850-75,500979-1,014EXWAhmedabad
IndiaPP Homo InjectionOffer Given75,8501,019FDAhmedabad
IndiaPP Homo InjectionOffer Given74,000994EXWDelhi
IndiaPP Homo InjectionOffer Given71,000-73,000954-981EXWMumbai
IndiaPP Homo RaffiaOffer Given72,850-75,500979-1,014EXWAhmedabad
IndiaPP Homo RaffiaOffer Given75,8501,019FDAhmedabad
IndiaPP Homo RaffiaOffer Given74,000-76,000994-1,021EXWDelhi
IndiaPP Homo RaffiaOffer Given75,600-77,6001,016-1,042EXWKanpur
IndiaPP Homo RaffiaPrice List75,600-77,6001,016-1,042EXWKanpur
IndiaPP Homo RaffiaOffer Given71,000-76,000954-1,021EXWMumbai
IndiaPP Homo RaffiaSold74,500-75,5001,001-1,014EXWMumbai
Middle EastPP Homo RaffiaOffer Given71,000-72,000954-967EXWMumbai
Saudi ArabiaPP Homo RaffiaOffer Given72,000-73,000967-981EXWMumbai

Range of import PP transactions in June on LC at sight, CIF India Main Port basis

OriginProductTransaction TypeOffers (USD/ton)
Middle EastPP Homo RaffiaOffer Given870-950*
Middle EastPP Homo RaffiaOffer Received920
Southern AfricaPP Homo RaffiaOffer Given900*
Description: *July shipment offers

Tags: Asia Pacific,English,ISC,India,PP,Quarterly

Published on July 7, 2020 12:17 PM (GMT+8)
Last Updated on July 7, 2020 12:17 PM (GMT+8)