26 March 2001 00:00 [Source: ACN]
Commodity polymers are expected to deliver a mixed performance for the financial year 2000- 01. While PP and lldPE are expected to show doubt-digit growth rates, the markets for ldPE and PS are likely to shrink. Competition in the domestic markets is intense as local supply exceeds demand for almost all the polymers. However, the high import tariffs of over 35% for polymers are protecting Indian producers from international competition.
The largescale imports of some finished products in 2000 has threatened many local processing companies. Their financial performances are likely to be affected this year, believes an industry source. A few are considering relocating their manufacturing activities which could impact domestic demand for polymers.
LdPE demand is projected to contract by as much as 10% during 2000-01 as lldPE continues to make inroads. Recently, domestic prices for ldPE have fallen below those of lldPE but it is unclear if this will boost consumption.
PS demand was in decline until December, mainly due to the weakness in the white goods sector. But producers are optimistic that the current low prices will stimulate consumption, especially in sectors that are price-sensitive and susceptible to polymer substitution. They are prepared for a 9-10% drop in demand in 2000-01.
The hdPE market is likely to grow by approximately 2-3%. Consumption in the pipes sector especially for cable ducting is growing fast due to the boom in the telecommunications sector. There has also been some increase in the use of hdPE pipes for gas distribution. However, the lower prices of PP have led to substitution in the raffia and injection moulding sectors. Given this scenario, the excess capacity in India is unlikely to be absorbed in the next year.
In PP, producers are looking at consumption of 900 000 tonne for the full year. This will be a 15% growth on 1999-2000.
The surplus domestic availability continues to drive PP consumption. PVC demand is likely to expand by 2-3%, to 620-630 000 tonne.
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