15 May 2007 10:19 [Source: ICIS news]
SINGAPORE (ICIS news)--India's largest polyvinyl chloride (PVC) producer Reliance Industries has turned to imports to meet the country’s growing demand, a company source said on Tuesday, joining fellow producer Finolex Industries Ltd.
Supply has been tight in the past few months due to unplanned and planned shutdowns at Finolex and earlier outages at Reliance plants.
“We have sold imported Asian cargoes in the Indian domestic market for the first time ever as our capacity was not adequate to meet the growing requirements of our customers,” he said.
The source would not specify the volumes being imported but said it could become a regular trend if the current robust demand and tight supply continued.
Finolex doubled its monthly imports of PVC in April to 5,000-6,000 tonnes to meet the growth in domestic consumption during the ongoing peak demand season, a company source said.
“Demand for PVC pipes has been extremely strong in the construction, water supply and irrigation segments,” he added.
Limited availability coupled with strong demand has resulted in a surge in import prices. Prices of imported PVC rose to $930-950/tonne CFR (cost and freight) ?xml:namespace>
However, a stronger Indian rupee had capped domestic prices, producers said.
Indian producers have rolled over their local PVC offers from April to May at rupees (Rs) 45.50/kg EXW (ex-works), despite strong demand and tight supply, to offset the additional costs their customers face due to a stronger local currency, domestic producers said.
The value of the Indian rupee has risen as high as Rs40.59 to the dollar, up 8.4% from Rs44 a month earlier.
Currently Indian producers are able to achieve relatively good margins on their sales of imported PVC as domestic prices convert to $950-960/tonne EXW.
“However, if the value of the Indian rupee declines, the viability of our imports will be under threat,” the Reliance source said.
($1 = Rs40.59)
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