PE Market Braces for Price Firmness Amid Supply Constraints and Rising Feedstock Costs

Key Highlights

1. Current Prices: Ahmedabad polymer rates include HDPE BM at ₹91,410/MT and LLDPE Extrusion Coating at ₹1,05,840/MT.
2. Supply Constraints: RIL's LDPE plant shutdown and fewer import consignments reduce availability.
3. Global Supply Disruptions: TotalEnergies' PP and Formosa's PVC outages exacerbate shortages.
4. Market Outlook: Q1 2025 may see moderate price hikes driven by tight supply, rising crude costs, and freight volatility.

Polymer Price Trends in Ahmedabad

• In Ahmedabad, HDPE BM is priced at Rs. 91,410/MT, while HDPE IM stands at Rs. 89,580/MT, and HDPE PE100 Natural is quoted at Rs. 91,620/MT. 
• Among LLDPE grades, LLDPE 2 MFI Non-Slip is priced at Rs. 94,770/MT, LLDPE Extrusion Coating at Rs. 1,05,840/MT, LLDPE 1 MFI Slip at Rs. 94,440/MT, and LLDPE Roto Moulding at Rs. 1,04,760/MT. 
• Additionally, MDPE BM in Ahmedabad is available at Rs. 93,360/MT.

Global Production Challenges and Their Effect on Supply

• Ample supply across the market led to a lack of urgency for pre-buying in December and early January.
• RIL's ongoing plant shutdown has tightened the availability of low-density polyethylene (LDPE) lamination and other variants.
• Declining import consignments have further restricted supply, particularly for Deep Sea shipments.
• Reduced availability of imports due to the strengthening USD and increased freight costs.
• Planned plant shutdowns in Europe are expected to limit polymer availability in Q1 2025.
• Weak demand in key sectors, with converters adopting a day-to-day purchasing strategy due to cautious market sentiment.
• Steady buying activity in LLDPE and LDPE variants, indicating potential firmness in near-term pricing.
• Demand is anticipated to improve gradually as converters adapt to market conditions and secure inventory amidst supply constraints.

Polymer News: Market Sentiment and Q1 2025 Price Forecast

• TotalEnergies has announced a force majeure on polypropylene (PP) supply from its Gonfreville site. The declaration follows an unexpected outage at the PP plant, which has significantly impacted availability. As a result, the company anticipates insufficient supply to fulfill all contractual commitments.
• Formosa Plastics has temporarily shut down its Polyvinyl Chloride (PVC) unit in Baton Rouge, Louisiana, USA, due to the anticipated freezing weather. The unit, with an annual production capacity of 750,000 tons, is expected to remain offline until January 23, 2025.
• Ethylene prices exhibited a mixed trend across global regions. In the USA, ethylene offers remained stable at 32.45 cents per pound on an FD GC basis. Meanwhile, in Europe, ethylene prices increased slightly, with FD NWE at €865/MT, up by €5, and CIF NWE at €875/MT, up by €15. In Asia, ethylene prices remained unchanged, with CFR NEA at $875/MT and CFR SEA at $925/MT.
• Hanwha, a leading South Korean supplier, has offered its PVC grades (P1000SB/P1000) to the Indian market at a price of USD 820 per metric ton, on a CIF basis. The shipment is scheduled for February 2025, with delivery options at Nhava Sheva, Mundra, and Chennai ports. The payment terms are based on an LC at sight.
• Braskem is set to expand its Polyethylene (PE) and Polyvinyl Chloride (PVC) production capacity in Brazil while introducing two new products. The $102 million investment will support the development of its first capacities for ethylene-based terpolymer and feedstock for unsaturated polyester resins, enhancing its portfolio and production capabilities.

Expert Opinion: Innovations and Capacity Expansions in Polymers

• The PE market in Q1 2025 is expected to face moderate price increases due to rising crude oil and feedstock costs, a strengthening US Dollar, and constrained imports. LDPE may see incremental price gains driven by supply disruptions and steady demand. 
• HDPE and LLDPE prices are likely to remain stable or increase slightly as supply tightens and global trade factors, including tariffs and freight volatility, exert pressure.