The rupee’s depreciation has proved a boon for the polymer industry. It has been two months since import of polymers has halted for this reason, leading manufacturers to raise the price of polypropylene (PP), for instance, after two earlier rounds of price cuts and offering price protection schemes to buyers to induce demand.
PP prices have been raised by Rs 2 a kg (to Rs 94-96 a kg), at a time when international polymer makers are cutting production capacities and maintaining flat prices. The primary producers of PP are companies such as Haldia Petrochemicals, Reliance Industries and Indian Oil Corporation, said market sources.
A fall in the price of naphtha, a primary crude material, has also helped polymer manufacturers improve margins. Naphtha prices are currently $750-760 per tonne and falling, said sources.
International polyethylene prices are $1,200-1,250 per tonne and PP is $1,320-1,350 per tonne. A month before, these were $1,300-1,350 per tonne and $1,400-1,450 per tonne, respectively. Sources said if the rupee starts appreciating, domestic prices would have to be cut.
Under the price protection schemes which companies had offered, a buyer would be compensated for any loss if the company decided to bring down prices within that week or month. Till April, polymer prices had been raised each month from January; the April rise was particularly stiff, with processors shifting to cheaper processed polymer.