In Japan, Kaneka has shut down its 215,000 tpa PVC plant in Takasago for maintenance until mid-October, while Taiyoh is expected to shut down its 100,000 tpa plant in Chiba in October. In addition, Shin-Etsu, Japan's leading PVC producer, has lowered exports to China, in order to cover the commitments made by its US affiliate.

Prices are expected to increase due to the increasing prices of crude oil and naphtha, a recent increase in VCM prices, and expectations of a continued recovery in PVC resin demand in line with the recovery in the regional economies.

The (PVC) international prices (C&F Far East Asia) of PVC increased by $65-70 per tonne to $650-680 per tonne inearly September 1999. Japanese producers increased their prices sharply for October, due to an increase in the costs of feedstock, VCM; and an appreciation in the yen.

VCM prices increased by around $80-100 per tonne to around $560-570 per tonne in mid-September 1999, due to high import costs of EDC. The Japanese yen appreciated to a 3-year high of 106 yen per US dollar.

Chinese- end users are unlikely to accept the price increase, however, they could absorb a part of the increase due to seasonally strong demand from the construction sector (for pipes and profiles).

Traders in China also resumed purchases in order to replenish low stocks. In Asia, prices also increased due to strong domestic demand from the construction sector in the US and Europe, and the consequent decline in exports to the Asian region. Reportedly, in 1999, US exports of PVC have declined by nearly 35 per cent till August.

Domestic manufacturers revised prices of all grades of PVC twice in September (by around Rs 780-1,860 pertonne on September 1, 1999 and around Rs 2,480 per tonne on September 17, 1999), in order to align domestic prices with international prices.

In August 1999, domestic offtake improved; sales of domestic producers increased by 80 per cent to around 71,000 tonnes. However, domestic production was lower due to a 10-15 day shut-down at IPCL, Gandhar (for hooking up to its cracker, to be commissioned in October), and a lower operating rate by DCM Shriram (reportedly, the company is facing financial problems, and is selling more carbide than PVC).

Strong institutional/governmental purchases of PVC, of around 100,000-120,000 tonnes, is expected with the opening of tenders by the state governments of Orissa, Maharashtra and Andhra Pradesh (Uttar Pradesh is expected to follow).

High Density Polyethylene (hdPE): Polyethylene prices increased in late August and early September 1999, largely due to the increasing cost of raw materials and an improvement in the seasonal demand from China. Prices of ethyleneincreased by around 30 per cent in early September.

However, polyethylene prices increased marginally, by 12-14 per cent, during the same period; prices (CFR Far East Asia) of the injection moulding grade of hdPE increased by $82 per tonne, to $660-670 per tonne, in early September. Chinese polyethylene demand improved in August 1999 (in July, Chinese demand was lower due to large purchases in June, and a shift in the regulations governing value-added tax and import tariff rebates).

South-East Asian converters also built-up inventories to last 2-3 months due to increasing prices. Reportedly, a few South Korean producers have sold all their product available for exports in September.

South Korean producers also continued to sell outside Asia to be able to negotiate better prices with Chinese buyers.

Domestic manufacturers revised their prices of all grades of hdPE twice in September (by around Rs 3,000-3,300 per tonne on September 1, 1999 and around Rs 2,500 per tonne on September 16, 1999), in orderto align domestic prices with international prices.

In the domestic market, offtake of hdPE/lldPE, across all grades, improved due to expectations of a price hike and genuine demand prior to the festival season. Sales of domestic producers increased by over 35 per cent, to around 82,000 tonnes, thereby enabling them to maintain operating rates and lower inventories by 35 per cent, to around 40,000 tonnes.

IPCL exported around 6,700 tonnes of polyethylenes in September. However, operating rates of IPCL, Gandhar (due to a 10-15 day shut-down for hooking up to its cracker, to be commissioned in October) and GAIL (due to problems in the production of prime grades) remained low.

Reportedly, IPCL, Gandhar's general purpose injection moulding, film, and blow moulding grades have been accepted well. It has not yet stabilised the production of its high molecular grade. GAIL continued to face problems in the acceptance of its material across grades, forcing it to offer discounts.At present, it is concentrating onthe production of the raffia and IM grades of hdPE, and has also started producing small quantities of lldPE.

Imports are expected to continue; imports of around 10,000-14,000 tonnes of hdPE and lldPE are expected in September 1999. According to sources, demand is expected to remain strong in September and October, due to preemptive purchases and festival season demand.

However, inventory levels with processors, which was around 57,000-58,000 tonnes in end August, is expected to increase further, by 18-20 per cent in September 1999.

Low Density Polyethylene (ldPE): International prices (C&F Far East Asia) of low density polyethylene (ldPE) increased by $107-115 per tonne, to $730-750 per tonne early last month. Prices continued to increase due to a sharp increase in ethylene prices.

Reportedly, traders increased purchases in anticipation of a further increase in Chinese demand for polyethylene films by end- October, prior to the start of the next agricultural season.

Availability could improve withthe commissioning of Titan Petrochemical's new 200,000 tpa ldPE plant in Malaysia this month.

Domestic manufacturers revised prices of all grades of ldPE twice last month (by around Rs 4,000 per tonne on September 1, 1999 and around Rs 2,500 per tonne on September 16, 1999), in order to align domestic prices with international prices.

Linear Low Density Polyethylene (lldPE) : International prices (C&F Far East Asia) of the butene grade of lldPE increased by $85 per tonne, to around $680-690 per tonne in early September 1999. Prices increased due to firm prices of naphtha and ethylene; and improved offtake from China in August and early September 1999. Reportedly, traders increased purchases in anticipation of a further increase in Chinese demand for polyethylene films by October-end, prior to the start of the next agricultural season.

Domestic manufacturers revised prices of all grades of lldPE twice in September (by around Rs 3,300-3,350 per tonne on September 1, 1999 and around Rs 3,200-3,300 pertonne on September 16, 1999), in order to align domestic prices with international prices.

Polypropylene (PP) : International prices (C&F Far East Asia) of the injection moulding grade of PP increased by $80-85 per tonne, to $600-630 per tonne in early September 1999. However, the increase in the price of the copolymer grade was lower, at $57-70 per tonne, to around $630-650 per tonne.Prices increased due to the increasing costs of raw materials and higher exports to non-Asian countries from South Korea. Propylene prices (FOB Korea) increased to over $ 480-510 per tonne, due to a sustained increase in the prices of naphtha and crude oil.

Recovery in PP prices has been slow as compared with that in other major resins, due to sluggish sales of finished products in China, especially injection moulded (IM) articles, in August 1999.

Sales were also affected due to the new government's efforts at imposing limits on the production of televisions and washing machines, which are large end-use sectors for blockcopolymer grades of PP.

Chinese state planners are expected to ban new production lines for a range of household appliances, and the construction of new luxury housing and office complexes, in order to reduce their oversupply.

Hence, copolymer (PPCP) prices, which are usually $30-50 per tonne higher than homopolymer (PPHP) prices, are currently at the same levels, due to expectations of the new restrictions.

However, in October, strong seasonal demand is expected from the IM and film sector, which could result in firm PP prices. A large South China washing machine manufacturer is reportedly resuming operations at its factory in September, which could also strengthen copolymer demand.

In the domestic market, offtake of PP, across all grades, remained strong in August, due to an expected increase in prices, and genuine demand prior to the festival season (though demand from the raffia and furniture segment of IM remained a bit subdued).

As a result, sales of domestic manufacturers remained steady ataround 60,000-61,000 tonnes in August, thereby enabling them to maintain high operating rates. Production at RIL Jamnagar's second line resumed in August, after a brief maintenance shut-down in July 1999.

Currently, RIL is concentrating on domestic sales due to the buoyant market; the company is expected to increase its focus on exports from the first quarter of 2000 (exports were at around 2,500-3,000 tonnes in August).

RIL's dependence on imported propylene is expected to decline after Reliance Petroleum's fluidised catalytic cracking unit (FCCU) stabilises operations at the refinery in Jamnagar.

Imports of PP are expected to continue; imports of around 10,000 tonnes are expected in September 1999.

According to sources, demand is expected to remain strong even in October, due to preemptive purchases and festival season demand. Demand from the raffia sector is also expected to improve.

Ethylene Dichloride (EDC) and Vinyl Chloride Monomer (VCM): International prices (CFR Far East Asia) of EDCincreased by $ 12-15 per tonne, to around $290-310 per tonne in early September 1999. Prices (CIF India) of imported material were around $ 330 per tonne. International prices (CFR Far East Asia) of VCM increased by around $17-22 per tonne, to around $450-475 per tonne in early September 1999.

Japanese VCM producers increased prices significantly, by around $80-100 per tonne in mid-September (for October deliveries), due to high import costs of EDC and a recent appreciation in the value of yen.

Japanese sellers expect the recent shift in China's PVC industry from the acetylene route to absorb VCM exports, and hence, maintain prices.

(Currently, China's VCM imports average 50,000 tpm compared with 1,000-5,000 tpm in early 1998.) Demand from the PVC sector is strong, due to strong seasonal pipe demand in North Asia.

Availability of VCM in Asia has been tight since August 1999, due to shut-downs at Keiyu Monomer, Japan (250,000 tpa capacity) and Satomo Indovyl, Indonesia. Nearly 1.44 million tpa ofcapacity is expected to be shut down during the September-November 1999 period in Japan, South Korea and Indonesia. Consequently, VCM prices are expected to remain firm in the fourth quarter of 1999.

Acrylonitrile Butadiene Styrene (ABS) : International prices (CFR Far East Asia) of ABS increased by $ 35-36 per tonne, to around $ 780-790 per tonne in early September 1999. However, unlike PS prices, ABS prices did not increase in line with the increase in the prices of feedstocks, ACN, butadiene and styrene.

In the domestic market, prices were increased due to the increase in styrene prices (CIF India) to around $ 550-600 per tonne in early September. Bayer increased the prices of its high impact (300N) grade by Rs 6,000 per tonne, to Rs 59,000-60,000 per tonne; while Bhansali Engineering Polymers increased its general purpose (IM23N) grade prices by Rs 10,000 per tonne, to Rs 54,000-55,000 per tonne.