FocusIndia's PVC demand to grow 12-15%

25 July 2007 08:17  [Source: ICIS news]

By Prema Viswanathan

 

SINGAPORE (ICIS news)-- Demand for polyvinyl chloride (PVC) in India is expected to grow by 12-15% overall in 2007, following 20% demand growth witnessed in the second quarter, Indian producers and end-users said on Wednesday. 

 

The main drivers of demand this year would be booming consumption in the construction, irrigation and pharmaceuticals segments, they said.

 

"The 20% demand growth seen in the second quarter of 2007 compared with Q2 2006 is far higher than the 12% demand growth seen in Q2 2006," said a producer.

 

The second quarter is typically the high demand season for PVC in India.

 

Demand for the main pipes segment has been subdued in the past few weeks with the advent of the monsoon season but was expected to pick up in September, when the start of the festive season spurs buying activity, an end-user said.

 

However, demand from segments other than pipes had not seen any dip in July, a second producer said.

 

"Demand continues to be good in the calendering film segment which is used in pharma packaging," the producer said. Although this segment accounts for only 7% of total PVC consumption in the country, it is growing by over 20% year-on-year, it added.

 

Demand from the PVC window profiles segment was also seeing a sharp increase, said an end-user.

 

"Window profiles account for only 5% of total PVC consumption in India. However, demand for this segment is projected to grow at 15-20% in 2007, far higher than the 10% growth envisaged for the dominant pipes sector," it said.

 

The 9.4% gross domestic product (GDP) growth in India’s financial year 2006-07 provided a boost to construction activity in the country. "Consequently, consumption of pipe grade PVC for use in this segment has ballooned," said a producer.

 

Some Indian converters expected demand growth for PVC across segments to gain up to 15% in the current year, from 1.2m tonnes, driven by the construction boom and by irrigation.

 

Production of PVC is estimated to fall far below the nameplate capacity of 1m tonnes in 2007, however, based on the outages witnessed so far this year and with no new capacities expected until 2008.

 

"This year has so far been very good for us, due to short supply and strong demand. The only lag in demand is in July-August, when the monsoon dampens market sentiment," said a converter from the pipes segment. It accounts for 60-70% of PVC consumption in India. 

 

Imports of PVC into India were also expected to have increased in the financial year 2006-07 due to rising demand, said the second producer.

 

“In 2006-07, PVC imports into India were estimated at close to 300,000 tonnes. In the coming year, this figure is likely to increase by at least 25%,” the producer said.

 

So tight has supply been this year that even Reliance Industries and Finolex Industries, the No1 and No 2 PVC producers in the country respectively, have had to import PVC to meet customer requirements.

 

By: Prema Viswanathan
+65 6780 4359

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