Indian polymer producers, converters hit by truckers' strike

09 January 2009 04:48  [Source: ICIS news]

By Prema Viswanathan

SINGAPORE (ICIS news)--The nation-wide Indian truckers' strike which entered its fifth day has hit polymers and plastic goods deliveries across the country, and could stifle production in some segments if it is prolonged, industry sources said on Friday.

"Polymer producers are piling up their inventories at their factory sites in the hope that the strike will be called off soon and deliveries can be resumed. As each day passes, the problem is intensifying," said a source close to Reliance Industries, India's leading polymer producer.

The All India Motor Transport Congress, which represents 6m truck owners and operators, had called for an indefinite strike since Monday, seeking lower diesel prices and withdrawal of service tax on truckers.

On a daily basis, as much as 20,000 tonnes of polymers are being transported across India, the source said.

More than 70% of freight in India moves by road, but the country's transport companies have been hit by a slowing economy, higher interest rates on vehicle loans and greater competition from railways.

"Fortunately, our customers have some stocks to tide over their immediate needs. However, very soon, their inventories will dry up and their production will be affected if they do not get fresh deliveries," said a source close to Haldia Petrochemicals, India's second largest polymer producer.

Polymer converters are also facing a delivery bottleneck due to the truckers' strike.

"Our cargo movement has been stymied by the strike. Our margins, already under pressure due to rising polymer costs, could be hit if the strike continues for long," said a producer of woven polypropylene (PP) bags based in Rajasthan state in northern India.

However, another PP converter based in Mumbai, said it had not faced any delivery hiccups so far, as most of its sales were to overseas markets and shipping routes were trouble-free.

A polyethylene (PE) processor, based in the north Indian state of Uttar Pradesh, said it was worried that polymer prices would escalate further if the strike continued. "This will increase our cost burden and put pressure on our margins, as we face much more customer resistance when we try to raise prices of our products than polymer producers do," it said.

Major polymer producers in India include Reliance Industries, Haldia Petrochemicals and Gail India.

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By: Prema Viswanathan
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