Astral, Century Plyboard surge up to 5% on anti-dumping duty extension

The shares of building material companies such as Astral, Century Plyboard, Finolex Industries soared up to 5 per cent in intraday deals on Monday, after analysts said that the extension of anti-dumping duty on import of CPVC resin from China and Korea will benefit the leading players. 

Individually, Century Plyboard surged 4.84 per cent at Rs 791.40 per share, while Astral soared 2.21 per cent at Rs 1991 a piece and Finolex Industries was up by 0.79 per cent at Rs 290 per share in intraday deals. Cera Sanitaryware also edged up by 1.43 per cent at Rs 9880.95 per share in intraday. 

 

On May 25, 2024, the Directorate General of Trade Remedies (DGTR) recommended extending the Anti-Dumping Duty (ADD) on CPVC resin imports from China and Korea for an additional five years, as the previous duty was set to expire on August 25, 2024. The new duty rates range from $593 to $792 per metric ton and will now be applied based on the country of origin.

Chlorinated polyvinyl chloride (CPVC) is a thermoplastic resin derived from polyvinyl chloride (PVC) with added chlorine. This process enhances CPVC's flame resistance, as well as its chemical and heat resistance.

CPVC is used in a variety of industries, including commercial and residential water piping systems, hot and cold water supply pipes and fittings, and fire sprinkler pipes and fittings.

Analyst at Prabudas Lilladher (PL) noted that this extension is expected to raise CPVC prices by Rs 35-40 per kg, benefiting leading CPVC manufacturers who can pass on these higher costs to consumers while maintaining their market share. 

The value of CPVC resin imports from China and Korea has already decreased significantly, with China’s share dropping to 10 per cent in April-June 2024, and major imports now coming from Thailand (31 per cent) and Japan (24 per cent).

The domestic PVC resin prices are on a downward trend, falling by Rs 12.5 per kg to Rs 79.9 per kg in Q2FY24. This, combined with rising CPVC prices, is likely to widen the price gap between PVC and CPVC pipes, potentially benefiting the PVC piping sector, those at PL noted. 

CPVC resin prices had been stable from August 2023 to June 2024 but are expected to rise due to the extended ‘ADD’. This will likely benefit organised domestic pipe manufacturers like Astral, Supreme Industries, Prince Pipe, and Finolex Industries, while impacting unorganised manufacturers reliant on cheaper imports, the brokerage firm added. 

“CPVC resin prices – ADD extension The CPVC resin import realisation has been range bound over Aug-23 to Jun 2024 e.g. average realisation of Rs 163 per Kg. With the extension of ‘ADD’, CPVC prices are expected to rise by Rs 35-40/kg. Organised domestic pipe manufacturers like Astral, Supreme Industries, Prince Pipe, and Finolex Industries likely to benefit over unorganised manufacturers, who depend on cheaper imports from China and Korea,” Praveen Sahay and Rahul Shah of PL wrote in a report. 

The 'ADD' extension is also expected to support domestic CPVC resin producers such as DCW, Lubrizol, and Epigral, analysts said.