Major polyvinyl chloride (PVC) manufacturers have increased the price by Rs 1.5 a kg (Rs 1,500 a tonne) after a gap of almost three months.
“Global prices have been spiraling for quite some time, especially in China, reflected through trade in their commodity exchanges. But it is not possible to raise prices in India parallel to global prices because demand season will start only in March-April. Therefore, we waited for an opportune time to increase prices. In fact in the specialised variety of PVC – paste or emulsion type — manufacturers have raised prices by Rs 5 a kg or Rs 5,000 a tonne”, said a company official who did not want to be named.
The major PVC manufacturers are Reliance Industries, Chemplast-Sanmar, and Finolex. PVC is the third-most used plastic or polymer petrochemical after polyethylene and polypropylene. It is used in construction, pipes and furnishings.
Globally, prices of PVC have gone up by $80-90 a tonne to $1,085 a tonne for the plain suspension variety and $1,800 a tonne for the specialized paste variety. Usually, prices go up in the range of $30-50 a tonne, said company sources.
This sharp increase was on the back of rising prices of raw material – crude and ethylene and vinyl chloride monomer (VCM). In fact prices of VCM and ethylene, two petrochemicals derived from crude and which act as raw material for PVC, are hovering at $900 a tonne and $1,150 a tonne, as against their usual range of $700-750 a tonne and $970-1,000 a tonne respectively.
Depending on the manufacturing process or polymerization, there are two types of PVC. Suspension is plain or rigid PVC used for construction works, while emulsion or paste PVC is used in coating and blending applications.
Indian manufacturers have not been able to keep up with the upward price revision globally due to the severe impact of imports. Due to a wide gap in supply-demand and relatively small manufacturing capacities compared to global peers in the PVC market, imports are meeting almost 40 per cent of the domestic demand, said market sources.
“With global supply outpacing demand, the price difference between imported PVC and domestic market is usually Rs 1-2 a kg at any given point in time” said sources. In India, while demand is at 2.5 million tonnes, domestic supply could cater to only 1.3 million tonnes.
The PVC domestic market, therefore, is rather stagnant with many companies cutting production or running below capacity. Chemplast was the only company to have added 200,000-tonne capacity last year. Much of the domestic market is diversifying to other chemicals or captive PVC pipe production, an end product of PVC.
