Record HPL sales fail to meet demand

Around 20 per cent plastic processing units in the eastern region are estimated to have shut down on account of raw material shortage, despite the fact that Haldia Petrochemicals Ltd (HPL), the primary polymer producer and leading player in the region, despatched record volumes November 2008.

The Indian Plastics Federation (IPF) alleged that domestic primary producers including HPL provided restricted and irregular supply of plastic granules creating scarcity in the market for various grades, thereby pushing up polymer prices up by around 25 per cent in the last 15 days.

"Nearly, 400 units are affected by raw material shortage while others are operating irregularly banking on inventories. There are over 4000 processing units in the state", claimed K K Seksaria, president of IPF.

HPL accounted for nearly 60 per cent of the net demand in the eastern region.

Total demand in the region was around 37,000 tons per month (tpm). Refuting the complaint, HPL sources indicated that the company despatched approximately 78,000 tons all over India in November, one of the highest sales in recent times, and certainly above October sales by around 5000 tons.

It despatched around 16,000tpm in the eastern region comprising various grades of polyolefins. The total demand for polyolefins in the region was around 25,000tpm, or around 9 per cent of all India demand.

This apart, the units in the region consumed above 12,000tpm of poly vinyl chloride (PVC), polystyrenes and other varieties of polymers.

"Most of the units had cut down consumption in the last three months hoping that crude prices and in turn polymer prices would come down. Last month, anticipating that prices had hit a rock-bottom and could increase thereafter, the processing units placed huge orders to build inventory. Demand was mostly on account of speculations and not real demand", sources in HPL explained. Granule prices were currently at Rs57 per kilogram (kg), down from Rs 100 per kg a few months back, according to IPF.