Outages reduce supply in Indian PE market, will this attract Chinese shipments?

Outages reduce supply in Indian PE market, will this attract Chinese shipments?

The shutdown at three major players in the PE market coincidentally occurred

The shutdown of GAIL (India) Limited and ONGC Petro additions Limited (OPaL) will cause a 760,000 ton/year HDPE/LLDPE conversion plant and a 340,000 ton/year dedicated HDPE plant to shut down for approximately one year. months from April 1. Another 220,000 ton/year Brahmaputra Cracker and Polymer Limited (BPCL) LLDPE/HDPE conversion plant in eastern India will be shut down for 11 days from March 29.

GAIL (India) also holds 70% stake in BCPL and 49% stake in OPaL. There are also unconfirmed reports of production problems at another major PE producer in India.

“There may be a commercial element to these three overlapping outages, as suppliers may not want their prices affected by any oil slide,” said one Indian trader. . But we think this is a “perfect storm” that China could exploit, at a time when China has a surplus that can be exported to markets with higher demand.

Chinese PE is expected to find its way to India

Another Indian trader said imported HDPE and LLDPE should be priced from the mid-$1500/tonne to the early-$1600/tonne CIF east coast of India. The trader said: “As we anticipate a shortage in April, we are sure that the Chinese shipments will go to India. We think China shipments will cost at least $80/ton less than Middle East shipments. That is a huge gap that can attract imports.”

Meanwhile, Chinese traders acknowledge that domestic supply pressure has led to quotes re-exporting to more profitable markets. “We are now focusing more on export markets, where the demand is much greater,” one of them said.

Pressure from China's re-exports has appeared in Southeast Asia

The PE market in Southeast Asia has seen goods re-exported from China at $20-50/ton lower than regular suppliers. In fact, a very low quote for US-origin HDPE film re-exported from China was recorded last week at $1,330/ton CIF Vietnam, which is at least below the prices of regular Middle Eastern suppliers. is 60 USD/ton.

“Supply in the domestic market is abundant and this could lead to re-exports from China to potential markets,” said another Chinese trader.

The trader pointed to inventory levels of major producers at around 790,000 tonnes on Wednesday; and added: “The stock is still sufficient. Demand in the domestic market is too weak. Therefore, we think prices can stay at current levels and remain attractive to export markets.”

Source: Chem

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