Polymer prices to head south

Polymer prices are likely to decline by at least 15 per cent in the next few weeks owing to huge capacity additions in Asian regions. The full impact of capacity additions would be known towards the end of the year when prices are expected to go down further.

Currently, good quality polymer is quoted at $1,340 per tonne, while the average quality is sold between $1,280 and $1,300 per tonne.

"The prices are higher now, but would surely start softening because of the numerous new facilities coming up in India, China and Saudi Arabia that would boost availability," said Anil Jain, managing director of Time Technoplast.

Jain said China, which till last year was importing for its 100 per cent consumption, had started producing polymer in large quantities. Hence, the availability of polymer would go up in the Asian region, resulting in lower prices, he added.

India consumes about 16 million tonnes of polymer, of which 8 million tonnes are produced domestically, while importing the remainder.

Owing to rising demand of its uses in plastics, the polymer sector witnessed a phenomenal growth of over 7 per cent in 2005 against the negative growth of 1 per cent in the previous year.

Experts believe that the growing demand of plastic packaging (where polymer is used as a raw material) in every walk of life would boost the growth of the polymer sector in tandem with the country's economy. The sector grew by 12 per cent in 2006, and can be expected to continue the same in the coming years, industry sources said.

About the sector's prospects, Jain said India's per capita consumption of plastics, which was around 4 kg, was likely to go up in the future, but would take time to match with 14 kg of China, 27 kg of the US and 35 kg of the EU.

"The outlook for the polymer industry remains bright with the buoyant growth of the Indian economy, the petrochemical industry and the easy and wide availability of raw materials," Jain added.

Meanwhile, polymer prices (poly vinyl chloride or PVC) for May delivery on the NCDEX declined to Rs 43.70 per kg on May 9 from Rs 45 per kg on April 18.