Platts Pe 24 June 2015

This Week’s Highlights:

Asian Ethylene - Prices flat in stagnant market

Asian HDPE - Stays flat on thin trading Asian LDPE - Drops $10/mt in FE Asia on weak demand Asian LLDPE - Stays flat on week in thin trading

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 25 – June 24, 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 June 17 (WK 24)

June 24(WK 25)

Price Change on Week

India Crude basket: (USD/b) 61.72 62.37 + 0.65

Naphtha: (MOP West India) 537.43 536.98 - 0.45

Ethylene :

CFR North East Asia 1414-1416 1399-1401 - 15

CFR South East Asia 1429-1431 1414-1416 - 15

Polyethylene :

HDPE Inj CFR South Asia 1329-1331 1329-1331 0 – HDPE Inj CFR Far East Asia 1299-1301 1299-1301 0 – HDPE Inj CFR South East Asia 1319-1321 1319-1321 0 – HDPE Blow CFR South Asia 1339-1341 1339-1341 0 – HDPE Blow CFR Far East Asia 1309-1311 1309-1311 0 – HDPE Blow CFR South East Asia 1329-1331 1329-1331 0 – HDPE Film CFR South Asia 1344-1346 1344-1346 0 – HDPE Film CFR Far East Asia 1304-1306 1304-1306 0 –

HDPE Film CFR South East Asia 1324-1326 1324-1326 0 –

LLDPE GP CFR South Asia 1319-1321 1309-1311 - 10

LLDPE GP CFR Far East Asia 1269-1271 1269-1271 0 – LLDPE GP CFR South East Asia 1289-1291 1289-1291 0 –

LDPE CFR Far East Asia 1349-1351 1339-1341 - 10

LDPE CFR South East Asia 1359-1361 1359-1361 0 –

China Domestic (YUAN/MT EX-WORK) : HDPE Film 10505-10545 10605-10645 + 100

LLDPE 9830-9870 9630-9670 - 200

LDPE 11005-11045 11030-11070 + 25

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

INDIA DOMESTIC PRODUCER PRICE - RIL (Ex Hazira)

Product June 17 (WK 24) June 24 (WK 25) Price Change on Week

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

HDPE Grade

Raffia 101.94 1455 100.94 1440 - 01 Film 99.46 1418 98.46 1404 - 01 Injection 102.93 1469 101.93 1455 - 01 Blow Moulding 100.79 1438 99.79 1423 - 01 Pipe 102.53 1463 100.53 1434 - 02 LLDPE Grade

Film 99.76 1423 97.76 1394 - 02 Rotomoulding 98.75 1408 96.75 1379 - 02 Injection 102.26 1459 100.26 1430 - 02 Extrusion Coating 101.54 1449 99.54 1420 - 02 LDPE Grade

General 118.79 1701 116.54 1668 - 2.25 Heavyduty 123.14 1765 120.89 1732 - 2.25 Milk Pouch 123.96 1777 121.71 1744 - 2.25 Injection 125.44 1798 123.19 1766 - 2.25 Lamination 132.38 1900 130.13 1867 - 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

Week 25 – June 24, 2015


POLYMERUPDATE (CIF INDIA PRICES)

HDPE Grade

CIF INDIA BY ORIGIN (Nhava Sheva Port)

South Korea Singapore Thailand Saudi Arabia

WK 24 WK 25 Price Changeon Week

WK 24 WK 25 Price Changeon Week

WK 24 WK 25 Price Change on Week

WK 24 WK 25 Price Change on Week June 17 June 24 June 17 June 24 June 17 June 24 June 17 June 24

Raffia 1370 1370 0 – -- -- -- -- 1360 1360 0 – -- -- -- --

Film 1400 1400 0 – 1350 1350 0 – 1400 1400 0 – 1360 1360 0 – Injection 1410 1410 0 – 1340 1340 0 – 1410 1410 0 – 1340 1340 0 – Blow Moulding 1420 1420 0 – 1360 1360 0 – -- -- -- -- -- -- -- --

Pipe 1460 1460 0 – -- -- -- -- -- -- -- -- -- -- -- --

HMHD 1470 1470 0 – 1400 1400 0 – 1430 1430 0 – -- -- -- --

LDPE Grade South Korea Singapore Thailand Qatar

General 1410 1410 0 – 1400 1400 0 – 1390 1390 0 – 1360 1360 0 – Heavyduty 1430 1430 0 – 1430 1430 0 – 1420 1420 0 – 1380 1380 0 – Milk Pouch 1440 1440 0 – 1440 1440 0 – 1430 1430 0 – 1390 1390 0 – Injection 1450 1450 0 – 1450 1450 0 – 1440 1440 0 – -- -- -- --

Lamination -- -- -- -- -- -- -- -- -- -- -- -- 1630 1630 0 –

LLDPE Grade South Korea Singapore Thailand Saudi Arabia

Film 1380 1370 - 10 1360 1350 - 10 1390 1380 - 10 1350 1340 - 10 Rotomoulding 1390 1380 - 10 -- -- -- -- -- -- -- -- 1380 1370 - 10 Injection 1410 1400 - 10 1390 1380 - 10 1410 1400 - 10 1400 1390 - 10 Metallocene -- -- -- -- 1700 1700 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

Week 25 – June 24, 2015


POLYMERUPDATE - INDIAN PORDUCER POSTING PRICE COMPARISON (GRADE WISE)

HDPE w.e.f 18-June-2015

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

BLOW MOULDING

RIL (BC/NC) 54GB012 100040 1427 RIL (Hazira) B56003 99790 1423 HALDIA (HC) B6401 101000 1441 GAIL (M/B/T) B52A003A 95010 1353 GAIL (M/B/T) B63A003A 95010 1353

INJECTION MOULDING ( MFI - 18 )

RIL (Hazira) 50MA180 98640 1406 HALDIA (HC) M5018L 100900 1439 GAIL (M/B/T) I50A180A 94700 1349

INJECTION MOULDING ( MFI - 7 ) UV

RIL (Hazira) L60075 101930 1455 HALDIA (HC) M6007LU 102550 1464 GAIL (M/B/T) I60U080A 97470 1389

HDPE FILM RIL (Hazira) F56003 98460 1404

HDPE PIPE RIL (BC/NC) 46GP009 100530 1434 HALDIA (HC) P-5300 110200 1576 GAIL (M/B/T) P54A001A 105530 1507

HMHDPE FILM RIL (Hazira) 52GF004 99450 1418

HALDIA (Works) F5400 101950 1455 GAIL (M/B/T) F55HM003A 96570 1376

RAFFIA

RIL (Hazira) 53EA010 100060 1427 RIL (Hazira) E52009 100940 1440 HALDIA (HC) R5801 106350 1519 GAIL (M/B/T) W50A009A 95560 1361

LDPE Ex-Mumbai (Panvel Depot) w.e.f 18-June-2015 * Prices are in INR/MT (inclusive of excise duty)

Grade Producer Grade No. *INR/MT USD/MT LDPE EC RIL 1070LA17 130128.75 1867

LDPE IM RIL 16MA400 123187.50 1765

LDPE GP RIL 24FS040 116538.75 1668

LDPE MP RIL 1005FY20 121713.75 1744

LDPE HEAVY DUTY RIL 22FA002 120892.50 1732 RIL 1020FA20 115526.25 1653

LLDPE w.e.f 18-June-2015

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

LLDPE EXTRUSION COATING

RIL (Hazira) E24065 99540 1420 HALDIA (HC) 72307E 102950 1469 GAIL (M/B/T) E36A060 96370 1373

LLDPE INJECTION MOULDING

RIL (Hazira) M26500 100260 1430

HALDIA (HC) 71501-S -- --

LLDPE FILM

RIL (BC/NC) 20FS010 96960 1382 RIL (BC/NC) 20FS020 97970 1397 RIL (Hazira) F18010 97750 1393 RIL (Hazira) F19010 97760 1394 HALDIA (HC) 71601S 100900 1439 GAIL (M/B/T) F20S009A 94830 1351

LLDPE ROTOMOULDING

RIL (BC/NC) 36RA045 99880 1425 RIL (Hazira) R35042 96750 1379 HALDIA (HC) 73005T 104250 1488 HALDIA (HC) 73204T 104250 1488 GAIL (M/B/T) R35A042A 97920 1396

*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

Week 25 – June 24, 2015


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 108 - 109 114 - 115 116 -117 109 - 112 111 - 112 114.5 - 115 117 - 118 117 - 117.5 118 - 119 112.5 - 113.5 121 - 122 118 - 118.5

HDPE Raffia 111 - 111.5 112 - 113 115 - 116 112 - 113 - 115 - 116 121 - 122 - - 108 - 109 - -

HDPE Injection 110 - 110.5 114 - 115 115 - 116 109 - 111 117 - 118 113 - 114 118 - 119 116 - 116.5 116 - 116.5 105 - 106 119 - 120 -

HDPE Blow Moulding

110 - 110.5 116 - 116.5 119 - 120 112 - 113 118 - 119 115.5 - 116 118 - 119 116 - 116.5 116.5 - 117 110 - 111 117 - 118 115.5 - 116

LLDPE Film 110 - 111 116 - 116.5 117 - 118 110 - 112 117 - 118 115.5 - 116 120 - 121 115.5 - 116 120 - 120.5 113 - 114 120 - 121 116.5 - 117

LDPE FILM 112.5 - 113 116 - 117 118 - 119 114 - 117 118 - 119 118 - 119 122 -123 120 - 120.5 120 - 120.5 116 - 117 120 - 121 120 - 120.5

Currency rates equivalent to 1 US Dollar :

Countries Currency Rates Countries Currency Rates

Indian Rupees (INR) 63.59 Japan Yen (JPY) 123.95

Pakistan Rupees (PKR) 101.72 Indonesia Rupiahs (IDR) 13,274.94

China Yuan Renminb (CNY) 6.20 Malaysia Ringgits (MYR) 3.74

Bangladesh Taka (BDT) 77.78 Singapore Dollars (SGD) 1.34

Sri Lanka Rupees (LKR) 133.96 South Korea Won (KRW) 1105.97

Thailand Baht (THB) 33.74 Saudi Arabia Riyals (SAR) 3.75

Taiwan New Dollars (TWD) 30.89 United Arab Emirates Dirhams (AED) 3.67

Heard in PE MARKET

Platts : HDPE film: July offer heard at $1,375/mt CFR China, 100-500mt, Thailand origin , LC90 days LLDPE film: Prompt offer at $1,290/mt CFR China, 100-500mt, LC 90 days, Canadian origin HDPE FILM: Domestic Chinese cargoes heard sold at Yuan 10,600-10,650/mt ex-works in east China, 100-500mt LLDPE film: Prompt offer at $1,300/mt CFR China, 100-500mt, TT, Qatari origin

Polymerupdate : N.A.

MUDASSAR

Week 25 – June 24, 2015


PLATTS INTERNATIONAL MARKET COMMENTARY & ANALYSIS

Asian Ethylene: Prices flat in stagnant market

- Market balance seen to change from August

- Buyers/sellers stay on sidelines

The Asian ethylene market was assessed unchanged Wednesday, with trading activity still

sluggish as buyers and sellers stuck to the sidelines. Buyers are reluctant to secure spot

cargoes as ethylene supplies are expected to rise from late July after steam cracker

turnaround season ends. In addition, deepsea supplies are available from the US and Europe

to Asia. "Deepsea supplies are increasing and buyers are also expecting supplies from regional

producers to increase too after turnaround season," said a trader. Sellers are in no hurry to sell

spot cargoes as current supplies remain tight and spot availabilities were limited as steam

cracker turnaround season continues. "Until discussions for July arrival cargoes finish, market

activities would remain sluggish," said the trader.

RATIONALE:

The CFR Northeast Asia ethylene price was assessed unchanged day on day at $1,400/mt

Wednesday. A buying indication was heard at $1,300-$1,350/mt CFR NEA, while a sell idea

was reported at $1,430-$1,450/mt CFR NEA. The CFR Southeast Asia ethylene price was also

assessed unchanged at $1,415/mt during the same period, with no bids or offers reported

amid sluggish trading.

Asian HDPE: Stays flat on thin trading

- India demand hit by monsoons

- SEA requirements slow due to Ramadan

Asian high density polyethylene prices were steady this week, amid thin trading due to a seasonal slowdown and a

standoff between buyers and sellers. Convertors were heard to have enough inventory and hence stayed away

from buying. Demand is typically low in the Middle East and Southeast Asia during Ramadan which began on June

18. Manufacturers lower their operating rates during the month, while some factories also undergo maintenance

shutdowns and workers work shorter hours, market participants said. Demand from India is also sluggish during

this period due to the monsoons, which typically run from July-September. There was a standoff between buyers

and sellers, as Middle East producers were heard to be keeping their offers high amid rising feedstock ethylene

costs, a firm European market, shipping delays to the Southeast and North Asian ports, and lower production

during the month of Ramadan.

RATIONALE:

HDPE film was assessed at $1,305/mt CFR Far East Asia Wednesday, flat week on week. China is the main market

for HDPE film. Offers were heard mainly for July-arrival cargoes at $1,350-$1,375/mt CFR Far East Asia (China),

but there were no bids heard as most buyers had already purchased cargoes in the beginning of the month. The

CFR South Asia HDPE film price was assessed at $1,345/mt CFR, also flat week on week. Offers were heard at

$1,360-$1,370/mt CFR South Asia (India), but was met with thin buying interest.

MUDASSAR

Week 25 – June 24, 2015


PLATTS INTERNATIONAL MARKET COMMENTARY & ANALYSIS

Asian LLDPE: Stays flat on week in thin trading

- Seasonal lull in Indian demand due to rains

- PE offers still high on high feedstock costs

Asian linear low density polyethylene prices were flat week on weak. Trading activity was still sluggish as

buyers and sellers stuck to the sidelines. Buyers were reluctant to secure spot cargoes as demand was weak

following a slowdown in manufacturing activity ahead of the rainy season in India. There was a standoff

between buyers and sellers, as Middle East producers were heard to be keeping their offers high amid rising

feedstock ethylene costs and a firm European market. The CFR Northeast Asia ethylene price was assessed

unchanged day on day at $1,400/mt Wednesday.

RATIONALE:

LLDPE was assessed flat week on week at $1,270/mt CFR Far East Asia Wednesday. There were no July offers

heard, although prompt cargoes were offered by traders at $1,290/mt CFR FE Asia (China). No bids were

heard. South Asia was assessed at $1,310/mt CFR, down $10/mt on weak demand. Traders said the typical

price spread between India and China was around $40/mt.

Asian LDPE: Drops $10/mt in FE Asia on weak demand

- Demand declines on monsoon, low manufacturing

- Shipping slows during Ramadan

Low density polyethylene prices fell in Far East Asia due to weak demand. Buyers were reluctant

to purchase imported cargoes in anticipation of further price reductions. Demand usually takes a

hit during the monsoon season in India, which runs from June-September, but this year it has

been delayed slightly. In addition, arbitrage opportunities to the US or Europe were also thin, as

June and July is typically the vacation period in Western countries, resulting in lower production

activities, traders said. According to market participants, demand was expected to rebound from

August onwards, once current high stocks fall. Meanwhile, since the start of the Muslim holy

month of Ramadan on June 18 there has been a slight lag in shipments and clearance procedures

in key exporting countries such as Saudi Arabia, traders said.

RATIONALE:

LDPE was assessed at $1,340/mt CFR Far East Asia Wednesday, down $10/mt week on week.

The CFR Southeast Asia marker was assessed at $1,360/mt, reflecting the $20/mt freight

differential between China and Southeast Asia. China domestic cargoes were priced around Yuan

11,050/mt ex-works, reflecting trades and current discussions.

MUDASSAR

Week 25 – June 24, 2015


POLYMERUPDATE - PE MARKET SUPPLY SCENARIO

LDPE plant taken off-stream by PCG PETRONAS Chemical Group (PCG) has taken off-stream its low density polyethylene (LDPE) plant unexpectedly. The plant was shut on June 23 owing to a fire. The impact of the fire on production levels could not be ascertained. A restart date for the plant has not been decided. Located in Kertih, Malaysia, the plant has a production capacity of 255,000 mt/year. PE plant likely to be taken off-stream by Hanwha Chemical Hanwha Chemical is likely to take off-stream its polyethylene (PE) plant for maintenance turnaround. The plant is planned to taken off-stream in October 2015. It is expected to remain off-stream for around 10 days. Located in Yeosu, South Korea, the plant has a production capacity of 327,000 mt/year. PE plant planned to be shut by Lotte Chemical Lotte Chemical is in plans to shut its

polyethylene (PE) plant for maintenance turnaround. The plant is planned to be shut in October 2015. It is likely to remain off-stream for around one month. Located at Daesan in South Korea, the plant has a production capacity of 135,000 mt/year. LLDPE plant likely to be taken off-stream by Yangzi Petrochemical Yangzi Petrochemical is in plans to shut a linear low density polyethylene (LLDPE) plant for maintenance turnaround. The plant is planned to be shut in end-July 2015. It is likely to remain off-stream for around one month. Located at Nanjing in China, the plant has a production capacity of 200,000 mt/year.

MUDASSAR

Week 25 – June 24, 2015


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

Week 25 – June 24, 2015


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: Where the rains must pour India’s number one short-term worry is the prospect of a second straight year of deficient rains. The Indian Meteorological Department (IMD), while lowering its monsoon forecast to 12% below the long period average, also predicted a 90% probability of an El -Nino event playing out. This casts a shadow over agricultural production. Delayed start to the monsoons this year has lowered kharif sowing by 9% as of June 12 compared with the same period last year. Though this per se is not much of a worry - the shortfall can be covered if rains pick up - the next 2 months (July and August) will be crucial. Given the significant downside risk from the monsoon anomaly predicted by IMD this year, we have cut our GDP growth forecast to 7.4% from 7.9% for fiscal 2016. We, however, expect consumer price index-based inflation to be contained at 5.8%, a tad lower than 6% last year, for three reasons: 1) enough cushion from food grain buffer stocks, 2) depressed global food prices facilitating imports, and 3) expectation of proactive food management and anti-hoarding steps from the government.

Agriculture accounts for less than a fifth of India’s GDP today, and is not the key driver of growth it once was. All the same, even in good times, the consumption sectors - particularly FMCG - look forward to normal rains for an extra kick to their sales. Today, when consumption and investment demand are weak and rural distress is high due to poor rains last year followed by damage from unseasonal rains this year, normal rains become all the more crucial.

MUDASSAR

Week 25 – June 24, 2015


IIP indicates industry growth gaining traction IIP grew by 4.1% in April as compared to 2.5% in March. Growth in IIP was supported by the manufacturing sector that grew by 5.1% versus 2.8% in March. In addition, according to use-based classification, capital goods rose by 11.1% y-o-y, followed by consumer goods (3.1%), and basic goods (2.8%). Production in electricity, as indicated by the IIP sub-index, signalled a contraction in the sector in April (-0.2%), albeit this was partly due to a high base in the previous year. The month-on-month seasonally-adjusted (SA) growth also rose to 3.4% in April as compared to -1.0% in the previous month. Manufacturing index growth revived in the month led by higher growth in food product and beverages (4.9%), wearing apparel (10.1%), wood products (16.2%), basic metals (7.3%) and machinery and equipment (20.6%). The month-on-month SA growth also picked up to 3.8% from -0.8% in March, signalling an uptick in momentum. On the other hand, core sector (accounting for 38% of IIP) growth remained negative for the second consecutive month (-0.4%). This was as sectors such as electricity (-1.1%), cement (-2.4%), fertiliser (-0.1%), refinery (-2.9%) recorded negative growth. On the other hand, only coal and steel sub-indices signalled an expansion in volumes over the previous year.

Inflation rises in May Inflation rose to 5.01%, up from 4.87% in April. Higher fuel-related inflation - led by an increase of Rs 7.42/litre in petrol and Rs 5.6/litre in diesel prices during the month - was behind the inflation pick-up. In May, a combination of higher global oil prices (16% higher than March 2015 levels) and weaker rupee (8% y-o-y) pushed up retail fuel prices. The combined fuel index (fuel & light and transport & communication) rose to 3% in May from 1.9% in April. Food inflation provided relief, falling to 5.1% from 5.4% in May. Monsoon is the biggest risk hereon, but a lot will depend on government action to keep a tab on food inflation.

Rupee cedes more ground The rupee slipped a notch to 63.8/$ by May-end from 63.6/$ in April, although on a monthly average basis, it rose to63.8/$ compared with 62.8/$ the previous month. The local currency also fell against the euro in May to 71.2/EUR from67.8/EUR in April. The decline was driven by net outflows by foreign institutional investors (FIIs) from Indian markets; theUS dollar's continued strength against most global currencies; and month-end demand from importers.FIIs moved out of the Indian market, with net FII outflows standing at $2.2 billion from net inflows of $2.4 billion in April.Net equity outflows were at $0.9 billion in May and net outflows in the debt market came in at $1.3billion from net inflowsof $0.6 billion in April.

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

Week 25 – June 24, 2015


POLYMERUPDATE PLATTS

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Platts Pe 24 June 2015