Spot polymer prices in the Indian market may stabilise, with a possibility of posting minimal gains, as domestic converters may start to replenish their inventory towards end-February, as per industry sources in ICIS. This will end nearly six months of “hand-to-mouth” buying amid slumping crude prices. Buying activities have remained sluggish but are expected to pick up in the next two weeks, as convertors run low on stocks, as per sources. Most buyers in India have adopted a cautious buying position amid volatility in the polymer and crude markets since the second half of last year.
Polymer prices in India largely tracked the sharp falls in crude futures. From August 2014 to January 2015, PP raffia prices have plummeted by 31%, while HDPE film prices slumped 26%, according to ICIS data. Major polymer converters in India are holding on to only two weeks of inventories at present, industry sources said. They may look to double their inventory levels in the coming weeks, ahead of the expected spike in offers for March shipments when market players in China return from a week-long Lunar New Year holiday.
The Chinese market will be on holiday from 18-24 February. Indian-based plastic converters could start buying during the Lunar New Year holiday lull in Asia to leverage on lower offers from the Middle East, market sources said.