Polyolefin buyers in India have slowed import purchases because the latest flare-up in the US-Iran war pushed prices higher and created uncertainty over delivery schedules.
Prices of several polyethylene (PE) and polypropylene (PP) grades have risen in recent weeks on the back of higher Brent crude values, prompting caution among traders even towards booking China-origin material.
Argus assessed linear low-density polyethylene (LLDPE) prices at $1,180-1,220/t cfr India for the week ended 31 July, compared with $1,090-1,150/t cfr India for the week ended 26 June. PP raffia prices were assessed at $1,190-1,240/t cfr India last week, compared with $1,100-1,140/t cfr India for the week ended 26 June.
Many bought in a panic in April and will not repeat the same mistake now, said a Mumbai-based trader, referring to a surge of imports in the initial days of the war.
India's PP imports rose rose by 39pc on the month to a record 201,732t in May on the back of a surge of China-origin arrivals because of tight domestic supply, Global Trade Tracker (GTT) data show.
A subsequent price decline in June on the back of the interim peace deal also made importers cautious about committing to shipments given that prices could fall if freight shipping conditions change.
Buyers would only pay a premium if the sellers can guarantee prompt shipments, the trader added.
Higher freight charges are also stopping Middle East-based producers from cutting offers. Shipping companies signalled surcharges of up to $140/t for movement through the Bab el-Mandeb strait after attacks on Saudi energy vessels.
The waterway is especially important for Saudi producers exporting polyolefins to key Asian demand hubs. But Saudi producer Sabic has not observed any disruption to container vessel traffic so far through the strait, it said last week.
Buying could pick up in the coming days if domestic inventories are drawn down quickly, a Middle East producer said.
Buying shifts to domestic producers
Many traders are turning to domestic producers in the short term.
The government's reintroduction of petrochemical import duties and the recent jump in import offers had encouraged some buyers to shift to Indian polyolefin suppliers, a key market participant said.
Curbs on feedstock usage were mostly removed by New Delhi, prompting most Indian petrochemical producers to raise operating rates to offset the fall in imports.
Major Indian producers have lifted LLDPE prices by 11,000 rupees/t ($115/t) and PP raffia prices by Rs12,500/t since 23 July because of higher crude prices and a slowdown in import bookings.
If import bookings stay low, supply could tighten from end-August when converters seek material ahead of India's festive season, which typically begins in September.
