India PVC demand to grow 10-15% - converters

24 November 2006 07:18  [Source: ICIS news]

By Prema Viswanathan

SINGAPORE (ICIS news)--The outlook for the Indian polyvinyl chloride (PVC) market is strong with demand set to continue growing at 10-15% for the rest of the year, especially from the construction segment, converters said on Friday. 

“It's a very good time for us. The only lag in demand was in the period July-September, 2006, when the extended monsoon dampened market sentiment,” Chetan Aggarwal, managing partner of PVC pipes maker Fine Flow Plastics, said.

“But the ongoing construction boom has reversed that setback, and caused demand to pick up again,” he added. The pipes segment accounts for 60-70% of PVC consumption in India. 

Despite rising demand, converters in India said margins were thin and they will have to raise profits by increasing volume, Nishank Tandon, director at PVC profile and water stop producer DM Polymers, said.

“It's not very easy for converters to raise prices even if our PVC costs go up,” he said. To get around this, the company plans to boost its exports to the Middle East, Africa and Australia. 

PVC prices tumbled in late October by $70-90/tonne, to $800-830/tonne CFR (cost and freight) India. Prices rose a little in mid-November, to $820-840/tonne CFR India, and have remained stable since, as the perception gained ground that prices may have bottomed.

Offering an alternative view, a major Indian supplier said that the domestic PVC market had been relatively flat in the first half of the Indian financial year which ends on 31 March, 2007.

“Even the pickup in demand that we're seeing now is mainly due to low inventory levels, and not based so much on a significant improvement in demand fundamentals,” C Paparao, senior vice president, PVC business, Reliance Industries, said. 

Nonetheless, he was cautiously optimistic that demand growth would pick up in the next few months, as buyers decide to build up their depleted stocks on the perception that prices were unlikely to fall further.

By: Prema Viswanathan
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