Mounting upstream costs, costlier imports, strengthening demand likely to raise PVC price in India – 13 Jan 2014

PVC buyers in India are most likely to face increased cost pressure in the coming days as there is a strong likelihood of producers in the country raising their prices for the polymer on account of mounting upstream costs, landed costs of imports moving up and demand for the Vinyl based raw material getting stronger in the country. Driven by surging Ethylene costs in international markets, prices of the key feedstocks--EDC and VCM--have been traversing northwards in Asia, due to which Indian producers are expected to be constrained to raise their PVC prices. During the last assessment, prices of EDC and VCM in the South East Asian region were found to be significantly high, at $449 per metric tonne and $910 per metric tonne respectively. The high feedstock costs have been the direct outcomes of Ethylene prices mounting in international markets on supply issues. 
 

As a consequence of rising Ethylene costs, the latest international PVC offers to India also have been quoted at higher prices than the previous offers. According to the recent inputs received,  Taiwan-based Formosa Petrochemical Corporation has quoted its latest PVC offer to India at $1,070 per metric tonne CIF, while, South Korea-based Hanwha Chemical Corporation has priced its latest offer of the polymer at $1,080 per metric tonne CIF to the country.
 

The prevailing demand conditions for PVC is firm and is expected to strengthen in the near term on account of demand for agricultural pipes picking momentum with the onset of agricultural season in the country. Agricultural pipes are mostly made up of the PVC raw material. Manufacturers of several leading PVC agricultural pipes in the country, contacted by Indianpetrochem in the context of their upcoming manufacturing schedules, said that they were in the process of stepping up their manufacturing volumes on the expectation for demand for the pipes strengthening with the nearing agricultural season. 
 

Moreover, interaction with several traders in the Mumbai and Delhi markets revealed that the prevailing stocks of PVC in the markets were not in excess. Many traders revealed of their stocks lessening due to active purchases, and some traders also revealed of possessing adequate stocks to cater to even bulk purchases.
 

Nevertheless, producers in the country are not likely to retain their prevailing prices for the polymer in the existing environment, but are most likely to raise their ex-work prices for the Vinyl-based polymer.