Inflationary polymer prices hits plastic industry

The skyrocketing prices of polymers have contributed greatly to the spiralling inflation and are a cause of concern to the plastic processing industry.

Such is the "inflationary impact of 56 to 105 per cent increase in the prices of plastic polymers" that the industry has represented to the government for a cut in import duty on the commodity, the president of the Organisation of Plastic Processors of India (OPPI) PP Kharas said.

During the last 15 months, there has been a significant increase in prices of domestic polymers, which ranges from a high of 91 per cent to 43 per cent, he said.

Analysts attribute the rise in polymer prices to the rising trend in petroleum sector because naphtha, a fraction derived from crude oil refining, is the starting point for producing ethylene and propylene which are the building blocks for polymers.

Kharas said consistent with the increase in crude oil prices, the international prices for naphtha have increased from $222 a tonne in May 2003 to $420 a tonne in August.

The polystyrene prices have shot up to Rs 78 a kg as on August 30 this year against Rs 40.5 a kg on May 1, 2003.

Similarly, polypropylene homo polymer rates have increased to Rs 60.95 a kg from Rs 38.15 a kg. Polypropylene copolymer prices have spiralled to Rs 63.15 a kg from Rs 39.85 a kg.

Asked about price structuring in petrochemical sector, Reliance Industries chief Mukesh Ambani recently remarked that they ride on the back of global oil prices but "We see them stabilising at about $30 to 35"