Indian polymers demand recovers, imports remain weak

Demand for polymers in India has seen a slight recovery, a week after the easing of restrictions on industrial operations to curb the Covid-19 pandemic.

The Indian government allowed non-essential businesses and operations to resume on 4 May but is maintaining a nationwide lockdown up to 17 May. The country's lockdown began on 25 March. Operating rates of plastic converters rose to around 20-30pc this week, which prompted demand for raw polymers.

But it remains to be seen if the increase in polymers' demand is sustainable because of weaker demand for finished polymers goods in industries such as the auto, household and construction sectors. A severe labour shortage across India because of transport and movement restrictions may also constrain operations of plastic conversion plants.

Import deals for polyethylene (PE) and polypropylene (PP) in the Indian market have been limited even as downstream demand recovers. Huge inventory losses and demand uncertainty have capped buying ideas among importers.

PE supplies are expected to rise in India following the restart of several plants in late April. State-controlled producers IOC and Gail and private-sector Haldia Petrochemicals have restarted at least half of their PE production capacity.

Gail has restarted two high-density polyethylene (HDPE) production lines with a combined capacity of 200,000 t/yr and one of its two 200,000 t/yr linear low-density polyethylene (LLDPE)/HDPE swing plants at Pata, with operating rates close to full capacity. IOC restarted its 300,000 t/yr HDPE and 350,000 t/yr LLDPE/HDPE swing plants at Panipat.

PP supplies are also expected to rise with increasing domestic production since late April. India's state-controlled producer MRPL has restarted its 440,000 t/yr PP plant at Mangalore. IOC restarted its 600,000 t/yr PP plant at Panipat but kept its new 700,000 t/yr PP plant at Paradip shut. Haldia also restarted its 350,000 t/yr PP plant.

These producers had stopped production for approximately a month as polymers sales ground to halt during the lockdown, which led to a inventory build-up in late March.

Domestic producers raised prices of PP and low-density polyethylene by 1,000 rupees/t ($13/t) from yesterday but maintained prices of all other polymers grades.

By Yee Ying Ang