 "Naphtha prices fall but no relief to polymer consumers yet")
Despite naphtha prices falling about 25 per cent in the past two months, polymer producers haven't passed on the fall in costs to domestic polymer-consuming industries.
Polymer producing companies consume naphtha as feedstock.
The Platts global naphtha index fell from $707 a tonne on February 18 to $536 a tonne as on April 24, according to a recent report by Platts. The fall was steeper than that in the Dated Brent price, which fell from $118 a barrel on February 18 to $97 a barrel on April 17.
Industry players say through the past year, polymer prices have risen about 15 per cent.
A senior official in the department of chemicals and Petrochemicals said polymer producers might have been right in holding on to prices, as it was too early to pass on the fall in naphtha prices.
"A global price fall in naphtha in two months is too short a time to be converted into a consumer price cut. Usually, polymer producers hold naphtha contracts for a longer period. The impact of a fall in naphtha prices would be visible in the next three to six months," the official said.
If the current situation continues, plastic makers would have to cut production. "Demand in key segments such as agriculture, white goods and consumer goods is weak. Several plastic makers have cut production to about 40-50 per cent of the capacity," said Yogesh Shah, past president, All India Plastics Manufacturers Association.
Though the fall in naphtha prices has improved cracker margins, it hasn't been sufficient to incentivise processing companies to pass on the cost benefit.
TOUGH TIMES CONTINUE
Polymer producing companies consume naphtha as feedstock.
The Platts global naphtha index fell from $707 a tonne on February 18 to $536 a tonne as on April 24, according to a recent report by Platts. The fall was steeper than that in the Dated Brent price, which fell from $118 a barrel on February 18 to $97 a barrel on April 17.
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"Though their input costs have declined, they (polymer producers) have not cut the prices of polymer. In fact, they have increased the price of polypropylene by Rs 2 a kg. The plastics industry, the major consumer of polymers, has to bear the burden," said Kailash Murarka, member of the governing council, Plastics Export Promotion Council. "Some companies almost have a monopoly in polymer supply. Sometimes, they are seen acting against the market. Ultimately, the consuming industry has to suffer," he added.
Industry players say through the past year, polymer prices have risen about 15 per cent.
A senior official in the department of chemicals and Petrochemicals said polymer producers might have been right in holding on to prices, as it was too early to pass on the fall in naphtha prices.
"A global price fall in naphtha in two months is too short a time to be converted into a consumer price cut. Usually, polymer producers hold naphtha contracts for a longer period. The impact of a fall in naphtha prices would be visible in the next three to six months," the official said.
If the current situation continues, plastic makers would have to cut production. "Demand in key segments such as agriculture, white goods and consumer goods is weak. Several plastic makers have cut production to about 40-50 per cent of the capacity," said Yogesh Shah, past president, All India Plastics Manufacturers Association.
Though the fall in naphtha prices has improved cracker margins, it hasn't been sufficient to incentivise processing companies to pass on the cost benefit.
TOUGH TIMES CONTINUE
- The Platts global naphtha index fell from $707 a tonne on February 18 to $536 a tonne as on April 24
- Polymer producers have increased the price of polypropylene by Rs 2 a kg
- Through the past year, polymer prices have risen about 15 per cent
- The impact of a naphtha price fall would be visible in the next three to six months
- Several plastic makers have cut production to about 40-50 per cent of capacity