The rupee’s appreciation has forced polymer manufacturers to cut prices by Rs 2 a kg for polypropylene (PP) and Rs 3 a kg for polyethylene (PE).
Since August, when manufacturers had raised prices, the rupee has appreciated by six to seven per cent, from a low of 55.45/47 to a high of 51.75 to a dollar. Imports have become cheaper and fearing a rise in these, polymer manufacturers have revised prices downwards, even as prices of the main feedstock, naphtha, remain high at $929-930 a tonne.
Indian polymer manufacturers had been raising their prices regularly in the previous nine months, owing to the rising price of raw material and a depreciating rupee. The falling rupee gave consumers no option but to resort to buying from the domestic market. Polymer prices remained high due to increased naphtha and crude oil prices.
Manufacturers say with prices coming down, consumer demand will improve. Earlier, to counter the rising price of polymers, consumers had cut inventory and were depending on reprocessed plastic for raw material, rather than buying fresh material. Even when polymer prices were cut globally to cope with the slowdown, manufacturers raised prices in India due to the rupee’s fall. With imports out (no polymer has come in from abroad in the past two months), the entire demand was catered to by domestic manufacturers. In May-June, manufacturers had cut prices and also offered price-protection schemes to buyers to stimulate demand.
By July-end, however, PP prices were raised by Rs 2 a kg (to Rs 94-96 a kg), at a time when international polymer manufacturers were reducing production capacities and maintaining flat prices. Haldia Petrochemicals, Reliance Industries and Indian Oil Corporation are the primary producers of PP.
