Platts PE 23 Sept 2015

This Week’s Highlights:

Asian Ethylene - Prices flat amid thin activity, firm feedstock costs

Asian HDPE - Rises on demand-supply fundamentals

Asian LDPE - Rises on firm demand despite bearish macroeconomics

Asian LLDPE - Flat to $20/mt higher on futures, demand

Platts International Prices 1

Polymerupdate Indian Domestic Producer Price 1

Polymerupdate CIF India Prices 2

Polymerupdate Indian Producer Posting Price Comparison 3

Polymerupdate Indian Open Market Price Table 4

Heard in PVC Market 4

Currency Rates 4

Platts International Market Commentary & Analysis 5

Polymerupdate - PE Market Supply Scenario 6

Platts Price Analysis Of PE Chain Processing Margins 7

Platts Polymer Shipping Costs (USD/MT) 8

Crisil Research – Macroeconomics & Currency Monthly Analysis 8

Point of Contact 10

Polymerupdate - About us & Copyright 10

Platts - About us & Copyright 10

MUDASSAR

Week 38 – September 23, 2015

Contact Details: 344, A to Z Indl. Estate, G. K. Marg, Lower Parel (W), Mumbai – 400013, INDIA | Email: [email protected] | Tel: +91-22-61772000 (25 lines) | Fax: +91-22-61772025 1

PLATTS INTERNATIONAL PRICES (USD/MT)

Product Sept 16

(WK 37)

Sept 23

(WK 38)

Price Change

on Week

India Crude basket: (USD/b) 44.83 46.01 +1.18

Naphtha: (MOP West India) 419.80 428.99 +9.19

Ethylene :

CFR North East Asia 834-836 879-881 + 45

CFR South East Asia 804-806 849-851 + 45

Polyethylene :

HDPE Inj CFR South Asia 1189-1191 1199-1201 + 10

HDPE Inj CFR Far East Asia 1149-1151 1169-1171 + 20

HDPE Inj CFR South East Asia 1169-1171 1184-1186 + 15

HDPE Blow CFR South Asia 1194-1196 1204-1206 + 10

HDPE Blow CFR Far East Asia 1154-1156 1174-1176 + 20

HDPE Blow CFR South East Asia 1174-1176 1189-1191 + 15

HDPE Film CFR South Asia 1174-1176 1184-1186 + 10

HDPE Film CFR Far East Asia 1134-1136 1154-1156 + 20

HDPE Film CFR South East Asia 1154-1156 1169-1171 + 15

LLDPE GP CFR South Asia 1159-1161 1179-1181 + 20

LLDPE GP CFR Far East Asia 1119-1121 1119-1121 0 –

LLDPE GP CFR South East Asia 1139-1141 1159-1161 + 20

LDPE CFR Far East Asia 1154-1156 1159-1161 + 05

LDPE CFR South East Asia 1174-1176 1199-1201 + 25

China Domestic (YUAN/MT EX-WORK) :

HDPE Film 9930-9970 9480-9520 - 450

LLDPE 9130-9170 8680-8720 - 450

LDPE 10080-10120 9780-9820 - 300

POLYMERUPDATE INDIAN DOMESTIC PRODUCER PRICE – RIL (Ex-Hazira)

INDIA DOMESTIC PRODUCER PRICE - RIL (Ex Hazira)

Product Sept 16 (WK 37) Sept 23 (WK 38) Price Change on Week

INR/KG USD/MT INR/KG USD/MT INR/KG

HDPE Grade

Raffia 89.44 1226 90.44 1240 + 01

Film 87.96 1205 88.96 1220 + 01

Injection 89.43 1226 90.43 1240 + 01

Blow Moulding 89.29 1224 90.29 1238 + 01

Pipe 90.03 1235 91.03 1249 + 01

LLDPE Grade

Film 87.26 1196 88.26 1210 + 01

Rotomoulding 86.25 1181 87.25 1195 + 01

Injection 89.76 1231 90.76 1245 + 01

Extrusion Coating 89.04 1221 90.04 1235 + 01

LDPE Grade

General 99.54 1369 101.79 1400 + 2.25

Heavyduty 103.89 1430 106.14 1462 + 2.25

Milk Pouch 104.77 1443 107.02 1474 + 2.25

Injection 106.19 1463 108.44 1494 + 2.25

Lamination 107.56 1482 109.81 1514 + 2.25

*Domestic Indian producer prices are quoted in INR/kg basic (Nett of all taxes); equivalent USD/MT price is calculated at

current US/INR rate. *Lot Size: 1 Truck Load (10 to 16 MT)

- Price assessments are based on information gathered from a cross section of the industry that includes resin producers,

processors, traders and distributors.

- Standard repeatable orders (based on confirmed market deals) form the basis of the prices.

PLATTS INTERNATIONAL PRICES Specifications: Cargoes of 100-500mt delivered 15-30 days forward from date of publication with up to 30 days

credit, basis CFR Far East Asia: China main ports (Shanghai, Shenzhen, Ningbo, Shantou, Hong Kong); CFR South East

Asia: Indonesia (Jakarta, Surabaya), Singapore, Philippines (Manila Bay), Malaysia (Port Kelang), Thailand (Bangkok,

Laem Chabang, Map Ta Phut), Vietnam (Ho Chi Minh). Platts prices reflect spot market values on the day of publication.

India Crude Import Basket Calculation: ( (Dubai + Oman) / 2 * 65.2% ) + (Dated Brent * 34.8%)

MOP West India : Mean of Platts FOB West India naphtha export price

MUDASSAR

mailto:[email protected]



POLYMERUPDATE (CIF INDIA PRICES)

HDPE Grade

CIF INDIA BY ORIGIN (Nhava Sheva Port)

South Korea Singapore Thailand Saudi Arabia

WK 37 WK 38 Price Change on Week



WK 37 WK 38 Price Change on Week Sep 16 Sep 23 Sep 16 Sep 23 Sep 16 Sep 23 Sep 16 Sep 23

Raffia 1200 1200 0 – -- -- -- -- 1220 1220 0 – -- -- -- --

Film 1210 1210 0 – 1170 1170 0 – 1220 1220 0 – 1200 1200 0 –

Injection 1210 1210 0 – 1160 1160 0 – 1230 1230 0 – 1190 1190 0 –

Blow Moulding 1230 1230 0 – 1170 1170 0 – - - -- -- -- -- -- --

Pipe 1260 1260 0 – - - -- -- - - -- -- -- -- -- --

HMHD 1270 1270 0 – 1220 1220 0 – 1260 1260 0 – -- -- -- --

LDPE Grade South Korea Singapore Thailand Qatar

General 1210 1230 + 20 1200 1220 + 20 1220 1240 + 20 1200 1220 + 20

Heavyduty 1230 1250 + 20 1230 1250 + 20 1250 1270 + 20 1180 1200 + 20

Milk Pouch 1240 1260 + 20 1240 1260 + 20 1260 1280 + 20 1190 1210 + 20

Injection 1250 1270 + 20 1250 1270 + 20 1270 1290 + 20 - - -- --

Lamination -- -- -- -- -- -- -- -- -- -- -- -- 1370 1390 + 20

LLDPE Grade South Korea Singapore Thailand Saudi Arabia

Film 1230 1230 0 – 1180 1180 0 – 1210 1210 0 – 1190 1190 0 –

Rotomoulding 1250 1250 0 – - - -- -- - - -- -- 1210 1210 0 –

Injection 1260 1260 0 – 1220 1220 0 – 1230 1230 0 – 1210 1210 0 –

Metallocene -- -- -- -- 1290 1290 0 – -- -- -- -- -- -- -- --

- All prices are in USD/MT CIF India (Nhava Sheva)

- For South Korea, Singapore, Thailand and Saudi Arabia : Cargo size of 50-100mt delivered within 30 days.

- Price assessments are based on information gathered from a cross section of the industry that includes resin producers, processors, traders and distributors.

- Standard repeatable orders (based on confirmed market deals) form the basis of the prices.

MUDASSAR




POLYMERUPDATE - INDIAN PORDUCER POSTING PRICE COMPARISON (GRADE WISE)

HDPE w.e.f 18-Sept-2015

Grade Producer (Ex Works) Grade No. INR/MT USD/MT

BLOW MOULDING

RIL (BC/NC) 54GB012 90540 1242

RIL (Hazira) B56003 90290 1238

HALDIA (HC) B6401 91500 1255

GAIL (M/B/T) B52A003A 85510 1171

GAIL (M/B/T) B63A003A 85510 1171

INJECTION MOULDING

( MFI - 18 )

RIL (Hazira) 50MA180 89140 1222

HALDIA (HC) M5018L 91400 1254

GAIL (M/B/T) I50A180A 85200 1166

INJECTION MOULDING

( MFI - 7 ) UV

RIL (Hazira) L60075 90430 1240

HALDIA (HC) M6007LU 93050 1277

GAIL (M/B/T) I60U080A 87970 1206

HDPE FILM RIL (Hazira) F56003 88960 1220

HDPE PIPE

RIL (BC/NC) 46GP009 91030 1249

HALDIA (HC) P-5300 100200 1378

GAIL (M/B/T) P54A001A 94030 1291

HMHDPE FILM

RIL (Hazira) 52GF004 89950 1233

HALDIA (Works) F5400 92450 1269

GAIL (M/B/T) F55HM003A 87070 1193

RAFFIA

RIL (Hazira) 53EA010 89560 1228

RIL (Hazira) E52009 90440 1240

HALDIA (HC) R5801 95850 1317

GAIL (M/B/T) W50A009A 85560 1172

LDPE Ex-Mumbai (Panvel Depot) w.e.f 18-Sept-2015

* Prices are in INR/MT (inclusive of excise duty)

Grade Producer Grade No. *INR/MT USD/MT

LDPE EC RIL 1070LA17 109811.25 1514

LDPE IM RIL 16MA400 108438.75 1494

LDPE GP RIL 24FS040 101790.00 1400

LDPE MP RIL 1005FY20 107021.25 1474

LDPE HEAVY DUTY RIL 22FA002 106143.75 1462

RIL 1020FA20 100833.75 1387

LLDPE w.e.f 18-Sept-2015

Grade Producer (Ex Works) Grade No. INR/MT USD/MT

LLDPE EXTRUSION

COATING

RIL (Hazira) E24065 90040 1235

HALDIA (HC) 72307E 92450 1269

GAIL (M/B/T) E36A060 86870 1190

LLDPE INJECTION

MOULDING

RIL (Hazira) M26500 90760 1245

HALDIA (HC) 71501-S -- --

LLDPE FILM

RIL (BC/NC) 20FS010 87460 1198

RIL (BC/NC) 20FS020 88470 1213

RIL (Hazira) F18010 88250 1210

RIL (Hazira) F19010 88260 1210

HALDIA (HC) 71601S 91400 1254

GAIL (M/B/T) F20S009A 84830 1161

LLDPE ROTOMOULDING

RIL (BC/NC) 36RA045 90380 1240

RIL (Hazira) R35042 87250 1195

HALDIA (HC) 73005T 93750 1287

HALDIA (HC) 73204T 93750 1287

GAIL (M/B/T) R35A042A 86420 1184

*Domestic Indian producer prices are quoted in INR/MT basic (Nett of all taxes) ; equivalent USD/MT price is at current US/INR rate. *Lot Size: 1 Truck Load (10 to 16 MT)

- Ex Works: BC/NC = Ex Works Baroda Complex / Nagothane Complex | Ex Works: HC = Halidia Complex | Ex Works: M/B/T = Mumbai / Bhiwandi / Thane

- Product Key: EC = Extrusion Coating, IM = Injection Moulding, GP = General Purpose, MP = Milk Pouch, MFI = Melt Flow Index, UV = Ultra Violet, HM = Heavy Molecule

- USD Price calculation: INR/MT – Aprox. Clearing and Forwarding charges / Basic Duty / Exchange Rate = USD/MT (For example: 82330 – 2500 / 1.075 / 54.24 = 1396)

MUDASSAR




POLYMERUPDATE - Indian Open Market Price Table Note: All prices are in INR/kg levels.

Product Mumbai Delhi Kolkatta Bangalore Indore Chennai Ahmedabad Rajasthan Kanpur Hyderabad Punjab Kerala

HMHDPE 106 - 107 107 - 107.5 106 -107 108.5 - 109 108 - 109 105 - 106 108 - 109 105 - 106 107 - 107.5 110 - 111.5 110 - 111 108 - 108.5

HDPE Raffia 104 - 105 105 - 106 - - - 104 - 105 - - 105 - 105.5 - - -

HDPE Injection 103 - 103.5 103 - 104 104 - 105 104 - 104.5 105 - 106 102 - 103 105 - 106 103 - 104 104 - 104.5 106 - 106.5 107 - 108 104 - 104.5

HDPE Blow Moulding

106 - 107 105 - 106 105 - 106 108 - 108.5 105 - 106 106.5 - 107.5 106 - 107 103 - 104 104 - 104.5 110 - 110.5 108 - 109 105 - 105.5

LLDPE Film 104 - 104.5 106 - 107 107 - 108 106 - 106.5 105 - 106 103.5 - 104.5 105 - 106 102 - 103 105 - 105.5 108 - 108.5 108 - 109 100 - 100.5

LDPE FILM 111 - 112 112 - 113 117 - 118 112 - 112.5 113 - 114 109 - 110 111 -112 113 - 114 118 -118.5 114 - 114.5 116 - 117 108 - 108.5

Currency rates equivalent to 1 US Dollar :

Countries Currency Rates Countries Currency Rates

Indian Rupees (INR) 65.95 Japan Yen (JPY) 120.08

Pakistan Rupees (PKR) 104.31 Indonesia Rupiahs (IDR) 14,633.29

China Yuan Renminb (CNY) 6.37 Malaysia Ringgits (MYR) 4.30

Bangladesh Taka (BDT) 77.66 Singapore Dollars (SGD) 1.41

Sri Lanka Rupees (LKR) 140.73 South Korea Won (KRW) 1185.84

Thailand Baht (THB) 36.07 Saudi Arabia Riyals (SAR) 3.75

Taiwan New Dollars (TWD) 32.90 United Arab Emirates Dirhams (AED) 3.67

MUDASSAR




Heard in PE MARKET

Platts :

HDPE Film: Oct notional buying ideas heard around $1,150/mt CFR China, 100-500mt

HDPE Film: Oct offers heard at $1,180-1,200/mt CFR China, 200-500mt, LC 90 days, Middle East origin

HDPE Film: Oct motional buying heard at $1,160-1,170/mt CFR SE Asia (Vietnam), LC at sight, 100-500mt, Middle East origin

HDPE Film: Oct selling idea heard at $1,180/mt CFR SE Asia (Vietnam), LC at sight, 100-500mt, Middle East origin

HDPE Film: Oct tradable level heard at $1,180-1,190/mt CFR South Asia (India), LC at sight, Middle East origin

LLDPE Film: Oct selling idea heard at $1,170/mt CFR SE Asia (Vietnam), LC at sight, 100-500mt, Middle East origin

LLDPE Film: Oct notional buying idea heard around 1,150/mt CFR SE Asia (Vietnam), LC at sight, 100-500mt, Middle East

origin

LLDPE Film: Oct tradable level heard at $1,180-1,190/mt CFR South Asia (India), LC at sight, Middle East origin

Polymerupdate :

N.A.

MUDASSAR




PLATTS INTERNATIONAL MARKET COMMENTARY & ANALYSIS

Asian Ethylene: Prices flat amid thin activity, firm feedstock costs

- Market bullish ahead of turnaround season

- China's August ethylene imports up on year

Ethylene spot prices were assessed unchanged on day amid thin trading and firmer

feedstock costs. Nevertheless, producers were optimistic that prices were stable to higher

ahead of a turnaround season in the region. In Southeast Asia, a buy tender seeking

3,000-4,000 mt ethylene for second-half October closed Wednesday, with price

discussions heard at $850-$860/mt CFR SEA. A market participant said Indonesia's

Chandra Asri was expected to shut its naphtha-fed steam cracker in the next two days for

about 100 days to complete an expansion program. The cracker is able to produce

600,000 mt/year of ethylene, rising to 860,000 mt/year when the program is completed.

Support emerged from firmer naphtha feedstock costs which stood at $454.37/mt CFR

Japan. In China, ethylene imports rose 3.6% on year to 118,647 mt, data released

Tuesday by the General Administration of Customs showed. But the August ethylene

imports were 10.2% lower from 132,065 mt posted in July.

RATIONALE:

The CFR Southeast Asia marker was assessed at $850/mt Wednesday. Notional price

discussions for H2 October cargoes were around $850-$860/mt CFR SEA. In line with SEA

prices, the CFR Northeast Asia marker was kept unchanged at $880/mt.

Asian HDPE: Rises on demand-supply fundamentals

- Plant turnarounds prop up prices

- China HDPE imports rise year on year in Aug

Asian high density polyethylene film grade prices rose week on week even though domestic market prices in China fell

during the same period. Purchasing activity in China remains muted as buyers have already covered their demand

ahead of the upcoming Golden Week holidays over October 1-7, a producer in China said. Domestic tradable levels for

HDPE film in China were heard to be around Yuan 9,500/mt, which works out to $1,195/mt CFR China on an import

parity basis. Expectations of tightening supplies propped up the Asian market, participants said. According to data

released by the General Administration of Customs Tuesday, China's HDPE imports rose on a percentage and tonnage

basis, increasing 19.30% or almost 64,000 mt in August compared with the same month last year. In plant news,

Saudi Arabia's Petro Rabigh will shut its Rabigh 1 plant on the Red Sea coast for 40-45 days from mid-October, in

preparation for the startup of Rabigh 2. China's Zhongyuan Petrochemical was also heard taking its 260,000 mt/year

LLDPE unit in Henan offline in October for 45 days of maintenance.

RATIONALE:

HDPE film was assessed at $1,155/mt CFR Far East Asia Wednesday, up $20/mt week on week on the back of robust

overseas demand. The assessment reflects buying ideas of around $1,150/mt and offers of around $1,180-1,200/mt.

CFR Southeast Asia was assessed at $1,170/mt, based on selling ideas of around $1,180/mt and notional buying levels

heard at $1,160/mt. The CFR South Asia marker was assessed at $1,185/mt, up $10/mt, based on workable deal

levels.

MUDASSAR




PLATTS INTERNATIONAL MARKET COMMENTARY & ANALYSIS

Asian LLDPE: Flat to $20/mt higher on futures, demand

- Buyers take positions ahead of China holidays

- Strong demand for agri-film ahead of winter

Asian linear low density polyethylene prices rose this week reflecting higher futures on the Dalian Commodity

Exchange. The actively traded January 2016 polyethylene futures contract on the Dalian Commodity Exchange

rose Yuan 105/mt day on day to settle at Yuan 8,455/mt ex-warehouse by Wednesday's close. The volume of

contracts at over 990,000 lots on the futures exchange was seen as much higher than typical, with many

participants trading in the futures market and taking positions ahead of China's Golden Week holiday October

1-7. Demand for agricultural films was also heard to be robust ahead of winter in many Asian countries.

RATIONALE:

LLDPE was assessed at $1,120/mt CFR Far East Asia Wednesday, unchanged week on week. The CFR

Southeast Asia marker was assessed at $1,160/mt, up $20/mt week on week, based on selling ideas of

$1,170/mt and buying ideas of around $1,150/mt. The CFR South Asia marker was assessed at $1,180/mt, up

$20/mt on week, based on workable deal levels.

Asian LDPE: Rises on firm demand despite bearish macroeconomics

- Demand in India picks up ahead of festival

- HDPE, LLDPE prices also support LDPE

Asian low density polyethylene rose this week, reflecting the strength in HDPE and LLDPE

markets. Although domestic trading activity in China remained subdued ahead of the upcoming

long holiday in October, demand was heard to be rising in India. "Demand is quite good because

of the upcoming Diwali festive season and the draw down of inventories," a buyer in India said.

"The market seems to be reasonably stable now," said a Southeast Asian trader, shrugging off

the bearish macroeconomic data released this week. The preliminary Caixin China manufacturing

PMI dropped to a 6 1/2-year low of 47 in September, signaling a significant contraction. The

Asian Development Bank on Tuesday trimmed its growth forecast for some of the region's biggest

economies including India and China.

RATIONALE:

Asian LDPE was assessed up $5/mt on week at $1,160/mt CFR Far East Asia Wednesday. Buying

indications were heard at $1,100-$1,150/mt while selling ideas were heard closer to the

$1,170/mt level for October-delivery cargoes this week. The CFR Southeast Asia marker was

assessed up $25/mt over the same period at $1,200/mt, based on workable deal levels by

Vietnamese buyers.

MUDASSAR




POLYMERUPDATE - PE MARKET SUPPLY SCENARIO

Osaka cracker operated by Mitsui at full rates

Mitsui Chemicals is running its cracker at full capacity levels. The company is currently running its cracker at 100% production capacity rate following a brief maintenance turnaround in last week. The cracker at

Osaka has an ethylene capacity of 450,000 mt/year.

Trial runs at new EVA/LDPE swing plant started by Jiangmen

Shandong Haoda Chemicals has started the trial operations at its new ethylene vinyl acetate (EVA) / low density LDPE) swing plant. The company has commenced trial operations at its swing plant in early-September

2015. The company is likely to begin commercial production by next month. Located in Tengzhou city of Shandong province, China, the plant has an EVA capacity of 100,000 mt/year and LDPE capacity of 120,000

mt/year.

MUDASSAR




PLATTS – Price Analysis of PE Chain Processing Margins

Naphtha to Ethylene

Polyethylene to Naphtha

Typical North East Asian $/mt margin for producing ethylene

from naphtha using a conversion cost of $350/mt. CFR FE Asia LLDPE price as a ratio to naphtha

Ethylene to Polyethylene

Intra-Asian LDPE Premiums

Typical $/mt margin for producing LLDPE in Far East Asia

from ethylene using a conversion cost of $150/mt Premium or discount of weekly LDPE Southeast Asian price over weekly Far East Asian LDPE

MUDASSAR




PLATTS – Polymer shipping costs (USD/MT)

From: Middle East Middle East

To: 25 – 100 MT > 100 MT

East China 20 – 25 10 – 15

South China 15 – 25 10 – 15

India 45 – 50 30 – 40

Southeast Asia 30 – 35 25 – 30

NW Europe 55 – 65 50 – 60

Turkey 50 – 70 40 – 60

US Gulf 130 – 140 120 – 130

Latin America 165 – 175 160 – 165

NOTES:

Polymers refer to Polyethylene, Polypropylene, Polystyrene, ABS, and PVC.

1) Middle East loadings refer to products coming from Jebel Ali (Dubai), Khalifa (Abu Dhabi), Jubail (Saudi Arabia), Shuaiba (Kuwait),

Rabigh (Saudi Arabia), Mesaieed (Qatar), Assaluyeh and Bandar Imam Khomeini (Iran) ports. The assessments are normalized

between these ports.

2) East China deliveries refer to products coming into Zhangjiagang, Shanghai, Jiangyin, Nantong, Ningbo, Nanjing, Zhenjiang ports.

3) South China deliveries refer to products coming into Shenzhen, Shantou, Hong Kong, Xiamen, Zhuhai ports.

4) India deliveries refer to products coming into Kolkata, Mumbai and Chennai ports.

5) South East Asia deliveries refer to products coming into Indonesia (Jakarta, Surabaya), Singapore, Philippines (Manila Bay),

Malaysia (Port Kelang), Thailand (Bangkok), Vietnam (Ho Chi Minh) ports.

6) Northwest Europe deliveries refer to products coming into Antwerp port. Deliveries into Rotterdam and Amsterdam ports will be

normalized to Antwerp.

7) Turkey deliveries refer to products coming into Istanbul and Mersin ports.

8) US Gulf deliveries refer to products coming into Houston port. No deliveries from the Persian Gulf.

9) Latin America deliveries refer to products coming into mainports in Brazil, Chile, Uruguay.

CRISIL Research – Macroeconomics & Currency Monthly Analysis

Overview: The commodity blessing

The global downturn, particularly the sharp slowdown in the resource-intensive Chinese economy, has depressed the prices of

many commodities. The decline is broad-based, including metals, oil and agricultural commodities. Although there are pockets of

stress within India due to low commodity prices, the overall economy stands to gain as the country is a net importer of a

majority of these commodities. The recent depreciation of currency has pared some gains from the drop in commodity prices.

Yet, decline in commodity prices has been much sharper than currency depreciation. Net-net, imports are cheaper. The fall in

international commodity prices, especially of crude oil, has helped improve India's key macroeconomic parameters, such as fiscal

deficit, current account deficit and inflation. Low crude prices have also provided an opportunity to reform the fuel subsidy

regime. Industries dependent on oil, such as auto, also get a boost from lower fuel prices. Lower international prices of edible oil

have proved a blessing this year. However, weak monsoons are expected to take a toll on acreage, yields and output of oilseeds.

A drop in international non-coking coal prices will reduce input costs for sectors such as power. India is a significant exporter of

agricultural products and is trade surplus in the segment. The exports include 11.6% of total rice production, 4% of total wheat

production and also cotton. The slump in global prices hurts the export income of farmers already reeling under consecutive

monsoon failure. Metal companies also stand to lose, particularly given a drop in aluminum and steel prices.

MUDASSAR




IIP splutters in July as factory wheels jam

Industrial production growth moderated to 4.2% in July from 4.4% in June. On a month-on-month basis also growth remained weak. The picture

for manufacturing was also less positive with growth slowing to 4.7% in July. That said, the numbers did throw up a bright spot - for one, the

capital goods sub-index rose 10.6%. It was disappointing to see the consumer-oriented sectors lose momentum seen in July (1.3%), signalling

that consumption demand remains fragile. Unseasonal rains early this year and the weak progress of monsoon so far are telling on demand. As a

result, low capacity utilisation is a key challenge faced by most industrial sectors.

Inflation resists a drop in August

Consumer price inflation (CPI) stood at 3.7% in August, unchanged from the previous month. July inflation was revised down from 3.8% released

earlier. In August, core inflation continued to ease, but a further fall in overall inflation was contained by a pick-up in the food and fuel related

inflation. Food inflation, at 2.2%, was 10 basis points (bps) higher than in July, whereas fuel inflation (fuel and light), at 5.7%, was up 30 bps.

Wholesale price index data continued to be in the negative zone, but the extent of decline slowed. Meanwhile, with rising rainfall deficiency, food

inflation in some commodities is firming up, and if not contained, can lower some gains from falling fuel prices. Core inflation (CPI excluding food

price index, fuel and light, and petrol and diesel) fell to 5.2% in August, down 10 bps over July - its second consecutive monthly decline. Much of this

fall came from lower inflation in health, personal care effects and education. The continued decline in core reflects sluggish demand conditions in the

economy.

FII outflows drag rupee under

The rupee lost ground against most major currencies in August as foreign institutional investors made a beeline out of the emerging markets

following a devaluation of the yuan. China devalued the yuan by 4%, announcing a change to its peg against the US dollar. The move, coming at a

time when the Chinese economy is in the throes of a slowdown, pulled down commodity prices and created jitters in currency and stock markets

worldwide. The rupee hit a low of 66.7/$ on August 25 before recovering a tad (it has depreciated 3% since the announcement of the Chinese

devaluation). It averaged 65.1/$ for the month, weaker than 63.6/$ in July. Against the euro and the pound, it dropped on average 3.5% and 2.4%,

respectively.

About CRISIL Research

CRISIL Research is India's largest independent and integrated research house. We provide insights, opinions, and analysis on the Indian economy, industries, capital markets and companies. We are India's most credible

provider of economy and industry research. Our industry research covers 70 sectors and is known for its rich insights and perspectives. Our analysis is supported by inputs from our network of more than 4,500 primary

sources, including industry experts, industry associations, and trade channels. We play a key role in India's fixed income markets. We are India's largest provider of valuations of fixed income securities, serving the mutual

fund, insurance, and banking industries. We are the sole provider of debt and hybrid indices to India's mutual fund and life insurance industries. We pioneered independent equity research in India, and are today India's largest

independent equity research house. Our defining trait is the ability to convert information and data into expert judgements and forecasts with complete objectivity. We leverage our deep understanding of the macroeconomy

and our extensive sector coverage to provide unique insights on micro-macro and cross-sectoral linkages. We deliver our research through an innovative web-based research platform. Our talent pool comprises economists,

sector experts, company analysts, and information management specialists.

MUDASSAR




MUDASSAR




POLYMERUPDATE PLATTS

Editorial Contact:

Director, Editorial: Jwalant Oza

Senior Editors: Harsh Nadkarni, Feroz Khan

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Maithreyi Ramdas, Pamela Sumayao, Jennifer Lee

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