Decoding the Current Asian PP and PE Market (Mar-Apr 2024)

The recent surge in prices of polyethylene and polypropylene within the Asian markets has started a new discussion regarding the abruptness of the surge and the course it will take in the days to come. To attain clarity in the dynamic landscape of polymer commodities thus, it is imperative for us to understand the various factors that led to price fluctuations in the market in the first place. Here’s a briefing paper on the same…  

Recent PP and PE Price Revisions in the Indian Market

We have seen multiple price revisions in the Indian market by major producers like RIL (Reliance Industries Limited), HMEL, and Supreme Industries this week. The market is strong and resilient, supported by rising crude oil prices and shipment trade rates due to ongoing geopolitical tensions.

These price revisions depict a strong market for PE and PP in the Indian market.

RIL Rate Revision w.e.f 1 April 2024:

• PP remains unchanged for domestic and deemed exports
• LDPE Extrusion Coating increased by Rs.2.5/Kg
• LDPE Heavy Duty raised by Rs.1.5/Kg
• Other LDPEs remain stable
• HDPE & LLDPE prices are unchanged
• PET increased by Rs.2/Kg
• PVC raised by Rs.1.15/Kg

RIL Rate Revision w.e.f 4 April 2024:

• PE prices remain unaltered

RIL Rate Revision w.e.f 10 April 2024:

• LD Heavy Duty raised by Rs.3/Kg
• LD Extrusion Coating up by Rs.5/Kg
• Other LD up by Rs.1/Kg
• LLDPE & HDPE prices remain unchanged
• PET increased by Rs.1.5/Kg

RIL Rate Revision w.e.f 11 April 24:

• PP Random increased by Rs.1/Kg

RIL Rate Revision w.e.f 12 April 2024:

• LLDPE reduced by Rs.3/Kg
• HDPE reduced by Rs.2/Kg

HMEL Rate Revision w.e.f 12 April 2024:

• LLDPE down by Rs.3/Kg
• HDPE down by Rs.2/Kg

From 1st April till 16th April, the prices have shown some deflection. In these two weeks, PP Random surged by Rs.1/kg, LDPE and its variants rose by Rs.3/kg to Rs.5/kg, meanwhile HDPE and LLDPE decreased by Rs.2/kg and Rs3/kg, respectively. On the other hand, polymers such as PET increased by Rs.3.5/kg, PVC by Rs.1.15/kg, and Supreme HIPS and GPPS went up by Rs.4/kg to Rs.4.5/kg, respectively.

Price Trends and Supply Dynamics in the Asian PE Market

In the Asian market, particularly in the China market, both LDPE prices and LLDPE prices saw a modest uptick, while HDPE prices remained nearly stable contrary to what happened in India. This movement can be attributed to changes in crude oil and PE production costs. Concurrently, numerous domestic PE plants underwent temporary shutdowns for maintenance purposes, leading to a reduction in supply and the consequent bolstering of prices. Petrochemical companies responded by marginally raising their prices, a move echoed by traders in the market. Despite these price adjustments, there exists a discernible resistance to the persistent escalation of prices, with downstream factories exhibiting diminished purchasing intentions in response to the high-priced supply.

Navigating the Asian PP Market Amid Volatility

The Asian PP market is also quite unpredictable, but we can assume it would remain strong and on the upper side as the international crude oil market continues to experience volatility and upward trends, fueled by geopolitical tensions. This volatility has a pronounced impact on the cost structure of PP production, providing robust support amidst a backdrop of tepid demand. Notably, the market witnessed a stabilisation in propylene prices following an initial decline, contributing to a relatively stable production environment for PP. The narrow fluctuations in methanol and propane prices further lent horizontal support to PP production costs. Despite these stabilising factors, concerns linger regarding the sustainability of demand, with a looming risk of price retracement in the medium term.

Asian PE and PP Market Outlook 

In light of these movements, experts foresee a trajectory of strengthening and consolidation in the polypropylene and polyethylene market in the short term. The stability and moderate-to-strong trend observed in upstream raw materials, coupled with tightened supply conditions and stable production among terminal enterprises, underscore the potential for a bullish market sentiment along with geopolitical factors. 

OFB’s Insight on Asian PP and PE Market

The current market dynamics suggest a mix of positive and negative factors influencing prices in the PE and PP markets. While rising crude oil prices and decreased supply pressure contribute to price increases, there are concerns about weakening demand and resistance to high prices among downstream buyers. Despite these challenges, the market is set to strengthen in the short term. However, it’s crucial for market stability that we closely monitor demand trends and production costs moving forward.

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