PVC becomes costlier on high feedstock prices

In little more than a month, petrochemical manufacturers have once again increased prices across all varieties to cope up with the rising feedstock prices.

Even then, imports are costlier than domestic prices for most polymers, PVC and chemicals, said a company official.

While prices of polyvinyl chloride (PVC) has gone up by Rs 2 a kg in plain suspension variety, polymer prices have gone up by Rs 2 a kg for polyethylene (PE) and polypropylene (PP).

LLDPE (Linear low density poly ethylene), the most popular variant of PE witnessed prices going up by Rs 1.50 a kg.

“It was not easy for the Indian petrochemical companies to increase prices so often earlier. In fact price rise was deferred for a long time in 2010 even if the feedstock or raw material - naphtha price was rising and margins turned negative for some companies. Now, the situation has changed. With crude prices going up much faster than the price rise in downstream products like polymers and petrochemicals, even Asian countries who generally import to India are feeling the pinch in margin. Rising crude price has resulted in spiralling naphtha price which is the major raw material for all substances. Therefore prices of all imports have gone up substantially- polymers, chemicals and PVC in all segment. Therefore, since price of imports have gone up, domestic users find it lucrative to buy from domestic manufacturers for their captive consumption even when the domestic companies have raised prices. That is why domestic companies can, now, comfortably resort to price rise so frequently,” explained a company official dealing with petrochemical.

 

Currently, the domestic prices of PP and PE are ruling lower by $150-200 a tonne in the domestic market while globally, naphtha prices have shot up to $1,500 a tonne as against $1,300-1,350 a tonne.

With the unrest in West Asia, companies expect strain in the supply of polyethylene since West Asian companies have been manufacturing mostly PE as a downstream product from crude.

Besides, many units in Asia may go for plant shutdown, apparently for maintenance in the coming months . However, some see this as a capacity cut down to maintain margins and cope up with rising crude prices.

However companies lament that price competitiveness is primarily seen as a correction for maintaining margin following rising crude and naphtha prices. “The demand is not picking up and that is a cause of worry,” said an official.

After sustaining a cut in prices for a long time, all petrochemical companies have raised those of a popular variant of polymer, polyethylene, by Rs 1 a kg or Rs 1,000 a tonne in January 2011.

While some petrochemical refiners use crude as the raw material, some use naptha.

LLDPE is one of the most popular variants of polyethylene, produced under low temperatures and used for plastic bags and sheets, plastic wraps, stretch wraps, pouches, toys, covers, lids, pipes, buckets, containers and the covering of cables.

Polypropylene is used in a variety of day-to-day products, from high-tenacity cement and fertiliser bags to tough fibres such as films and containers. HDPE is a high-tenacity polymer, used primarily in preparation of bottles, chairs, mugs, wood plastic composites, telecom ducts. PVC is used for construction and pipes.