Key facts
- Indian polyolefin importers are slowing purchases due to rising prices and delivery uncertainties linked to Middle East risks.
- Prices for polyethylene and polypropylene have increased, influenced by higher Brent crude values.
- Traders are hesitant to book shipments, citing past panic buying and potential price declines.
- Higher freight charges and potential surcharges for the Bab el-Mandeb strait are impacting offers.
- Some buyers are shifting to domestic Indian producers due to import duties and higher import offers.
- Major Indian producers have raised LLDPE and PP raffia prices.
Indian polyolefin importers are slowing their purchases of imported polyethylene (PE) and polypropylene (PP) due to escalating prices and uncertainty over delivery schedules, influenced by geopolitical tensions in the Middle East.
Prices for several PE and PP grades have risen in recent weeks, driven by higher Brent crude values. This has led to caution among traders, even for material originating from China. Linear low-density polyethylene (LLDPE) prices were assessed at $1,180-1,220/t cfr India for the week ended July 31, up from $1,090-1,150/tcfr India in late June. Similarly, PP raffia prices increased to $1,190-1,240/tcfr India from $1,100-1,140/tcfr India over the same period.
A trader from Mumbai highlighted that buyers are hesitant to repeat the panic buying seen in April, which followed the initial escalation of the US-Iran conflict. India's PP imports had surged by 39% in May to a record 201,732 tonnes, largely due to arrivals from China amid tight domestic supply.
Further complicating matters, higher freight charges and potential surcharges for passage through the Bab el-Mandeb strait, following attacks on energy vessels, are preventing Middle East-based producers from lowering their offers. Shipping companies have signaled surcharges of up to $140/t for this route, which is critical for Saudi producers exporting to Asia. However, Saudi producer Sabic stated it has not observed any disruption to container vessel traffic through the strait.
In response to increased import offers and the government's reintroduction of petrochemical import duties, many Indian traders are turning to domestic producers. Indian petrochemical producers have raised their operating rates, with major players increasing LLDPE prices by 11,000 rupees/t ($115/t) and PP raffia prices by Rs12,500/t since July 23, citing higher crude prices and reduced import bookings.
Market participants anticipate that if import bookings remain low, domestic supply could tighten from late August as converters prepare for India's festive season, which typically begins in September.