Polymer manufacturers have increased prices across the board for the second time this year, after the shutdown of three units of the Jamnagar plant of Reliance Industries Ltd (RIL) created supply shortage.
Polyethylene (PE) prices have gone up by Rs 2-3 a kg and Rs 2 a kg for polypropylene (PP). After the increase, PE prices have gone up to Rs 80-87 a kg, while PP prices are at Rs 90-95 a kg.
Company sources said other reasons that triggered a price rise were growth in demand in the domestic market and rising global prices of polymers. “Imports are low as global prices are high, which is why domestic manufacturers can afford to increase prices,” said the source.
“Polymer manufacturers were not able to revise prices upwards for a long time given the competition from cheap imports. Therefore, they have some time till the price increase can match up import prices in a scenario of rising prices in the global market,” said the company official.
This is the second round of price rise this year after repeated price cuts last year. Polymer manufacturers had increased prices of polypropylene (PP) by Rs 3 a kg and polyethylene (PE) by Rs 1 a kg last month.
Imports have also become expensive, due to a surge in demand from China, Taiwan and Japan . These markets have been inactive since December 15 and have opened now after the Chinese new year. Global prices of polymer, especially PE, have gone up by $120-150 a tonne and are now at $1,420-1,450 a tonne.
Due to weak domestic demand for PP and PE last year, polymer makers were forced to offer price protection schemes to attract customers. The government had removed the anti-dumping duty on PP imports from Saudi Arabia, one of the major manufacturers globally. “This had led to a further slump in the domestic market, since Saudi imports were cheaper,” said a source.
Under the price protection scheme, customers are compensated for losses if the company cut prices further within that week or month. Haldia Petrochemicals, Indian Oil Corporation, GAIL and RIL are the four major polymer manufacturers.