PE Market Faces Weak Demand and Supply Pressures

Key Highlights

1. Price Trends: PE100 Black in Bhiwandi and Mundra is priced at ₹88,800/MT, while Roto Moulding (Prime) in Ahmedabad is ₹96,590/MT. Prices for other grades vary across regions.
2. Demand-Supply Imbalance: Rising supply from new facilities and imports meets limited downstream demand, creating bearish market sentiment.
3. Industry Developments: Reliance’s LLDPE and PP lines to undergo 15-day maintenance, while Sinochem transitions from EVA to LDPE production.
4. Outlook: Experts anticipate weak PE fluctuations due to weak cost support from crude oil and a lack of significant macroeconomic drivers.

Polymer Price Trends

• The value of HDPE PE100 Black in Bhiwandi and Mundra is Rs. 88,800/MT. 
• The HDPE BM grade from Ahmedabad (OG) is valued at Rs. 85,860MT, while Ahmedabad's BM grade (Prime) is valued at Rs. 86,680MT. 
• The HDPE IM grade in Ahmedabad (Prime) is valued at Rs. 89,030/MT, and the PE100 Natural in Ahmedabad (Prime) is valued at Rs. 86,060/MT. 
• The 2 MFI Non-Slip in Ahmedabad (Prime) is priced at Rs. 92,190/MT, and the Extrusion Coating in Ahmedabad (Prime) stands at Rs. 98,760/MT. 
• The 1 MFI Slip in Ahmedabad (Prime) is valued at Rs. 91,870/MT, while the Roto Moulding in Ahmedabad (Prime) has a value of Rs. 96,590/MT. 
• Lastly, the BM grade in Ahmedabad (MDPE) is priced at Rs. 89,800/MT.

Polymer Demand and Supply Dynamics

• The PE market continues to weaken, with prices on a downward trend. On the supply side, the outlook remains pressured due to increasing production from new facilities and the restarting of maintenance devices in the Chinese market.
• Additionally, the expected arrival of imported goods at the port will further add to the supply. Despite the maintenance restart phase, supply pressure is likely to persist. 
• On the demand side, downstream product companies are mainly focused on replenishing their inventory, but there is limited demand follow-up, leading to a bearish market sentiment. 
• Traders are lowering prices and shipping actively, while some factories are preparing for holidays. Overall, both supply and demand are experiencing weakness.

Polymer Industry Updates and Global News

• Reliance Industries Limited (RIL) will commence maintenance shutdowns for its LLDPE plant and one polypropylene (PP) production line on January 20, 2025. The maintenance period is expected to last approximately 15 days.
• Located in Jamnagar, Gujarat, the LLDPE plant has an annual production capacity of 450,000 tons, while the PP line has a capacity of 300,000 tons per year. This planned shutdown aims to ensure the operational efficiency and reliability of the facilities.
• Sinochem Quanzhou Petrochemical, based in Quanzhou, Fujian, China, has transitioned its Ethylene Vinyl Acetate (EVA) unit to Low-Density Polyethylene (LDPE) production. 
• The facility, previously designed for an annual EVA production capacity of 140,000 tons, will now cater to the growing demand for LDPE in the region.
• On Tuesday, despite a drop in crude values, SM prices were left unchanged in Asia.
• Prices rolled over on the back of a quiet buying momentum in the Asian region.
• On Tuesday, FOB Korea SM prices were assessed at the USD 1015-1020/mt levels, day-on-day stable.CFR China SM prices were assessed at the USD 1030-1040/mt.
• CNOOC and Shell Petrochemicals Company Limited (CSPC) will expand their petrochemical complex in Huizhou, China. The expansion will include a 1.6 million tonnes per year ethylene cracker and downstream derivatives units producing chemicals.
• Dangote refining complex in Nigeria to start PP output in February. The first PP unit is expected to start up in early February; the new refinery seeking to end PP imports.
• Borealis declares force majeure on HDPE pipe supply at Stenungsund on a technical glitch. Force majeure placed on supply of crosslinked polyethylene grade; outage due to unspecified technical issues.

Expert Opinion on Polymer Market Trends

With both supply and demand showing signs of weakness, and no significant positive macro news, PE is expected to see weak fluctuations in the coming week. The support for crude oil on the cost side may also weaken, further contributing to the subdued outlook.