India petrochemical demand enters seasonal lull post-holiday

SINGAPORE (ICIS)–Oversupply and higher freight costs are driving down petrochemicals demand in India, with trades likely to remain subdued after the Diwali holidays.

• Prolonged monsoon season hurt pre-Diwali demand
• Seasonal demand lull begins mid-November
• US election worries weigh on Indian rupee

Demand traditionally picks up post-Diwali but a prolonged monsoon season, coupled with ample inventories, has led to a lack of import demand which is unlikely to change for the rest of the year.

India was on holiday on 31 October to 1 November for Diwali or the Hindu festival of lights.

Sentiment among market players was mixed, with some hopeful that post-holiday demand will pick up in certain products like polyvinyl chloride (PVC) ahead of implementation of import certification deadline under the Bureau of Indian Standards on 24 December.

Demand lull typically sets in after the holiday, particularly for the pharmaceutical and manufacturing sectors, until end-November, when operations are ramped up in preparation for the summer holidays – between May and August.

Overall production in the south Asian country typically increases along with demand in the January-March period – India’s fiscal Q4.

For isopropanol (IPA), India’s import demand will be dented by antidumping duties (ADDs) imposed on Chinese cargoes.

In the ethanolamines and acrylonitrile butadiene styrene (ABS) markets, domestic supplies remains ample, with post-Diwali demand likely to remain soft.

India is a major importer of Chinese petrochemicals. It has been adopting protectionist measures against Chinese exports amid an oversupply in the world’s second-largest economy, whose own domestic demand is weak.

US ELECTIONS A CONCERN
India’s economy is slowing down, causing the rupee (Rs) to depreciate, with petrochemical import discussions scant amid ample inventories.

A weaker currency makes imports expensive.

The rupee plummeted to a near-record low of Rs84.075 against the US dollar on 31 October, partly on uncertainties over the US elections results.

The Reserve Bank of India (RBI) had intervened to limit the rupee’s fall, selling US dollars to stem the loss and allowing it to climb back from a record low of Rs83.79, according to newswire agency Reuters.

At 05:08 GMT, the rupee was trading at Rs84.03 against the US dollar.

There are concerns that intra-Asian exports by China would increase on the possibility of further US punitive tariffs on Chinese products if Donald Trump was elected a second time as US president.

His administration in 2017-2021 kicked off the US-China trade war in 2018.

Trump is running under the Republican ticket against Democrat Kamala Harris in the US elections, which will be held on 5 November 2024.

Focus article by Jonathan Yee

Additional reporting by Veena Pathare, Clive Ong, Angeline Soh, Aswin Kondapally, Hwee Hwee Tan and Pearl Bantillo