FocusPakistan PVC use can grow 20-25% on local and Afghan demand

10 June 2009 06:58  [Source: ICIS news]

By Ng Hun Wei

SINGAPORE (ICIS news)--Polyvinyl chloride (PVC) demand in Pakistan can grow by 20-25% this year, driven by higher domestic consumption and construction in neighbouring war-torn Afghanistan, traders and producers said on Wednesday.

Bucking the downtrend seen in most other domestic markets, monthly PVC demand in Pakistan had increased by 38% from around 8,000 tonnes in February this year to 11,000-11,500 tonnes currently, traders and producers said.

PVC demand for the year could grow from around 100,000 tonnes/year to 120,000-125,000 tonnes/year as a result, they added.

“It’s fair to say that the market situation here is better than in most other countries. Demand this year has exceeded initial expectations so far,” said a source close to Engro Polymer and Chemicals, the sole chlor-alkali producer in Pakistan.

Pakistan's market conditions should have been less rosy, judging from the current economic indicators -- the country is struggling with a gaping fiscal deficit, persistently high inflation and slowing GDP growth.

Newfound political stability had, however, re-invigorated the domestic PVC industry even as other sectors braced themselves for an extended economic downturn, market sources said.

Demand improvement was most visible in Punjab, the most populous province in Pakistan, they noted. Infrastructure projects in the province had stalled early this year after a political crisis saw the removal of is chief minister but resumed pace when he was restored to power in March.

“The chief minister of Punjab (Shahbaz Sharif) has been pushing for the use of high quality PVC in pipe manufacturing. Pipe manufacturers, who have been using recycled materials, are therefore turning to newly-produced PVC instead,” said the source close to Engro Polymer and Chemicals.

Around 3,000 tonnes/month of recycled material used to go into pipe manufacturing. Half of that volume is now being replaced by new PVC, the source added.

Demand growth had also come from neighbouring Afghanistan, particularly along the North-West Frontier Province (NWFP), traders and producers said.

Military operations had failed to dampen construction efforts in the war-torn country without its own PVC production capacity. Around 1,500-2,000 tonnes of PVC, in the form of PVC pipes, were being imported into the country each month, traders and producers said.

The spike in demand had as a result put a stop to Pakistan’s PVC exports for now.

The country exported a total of 8,000 tonnes of PVC into China in February and March but the flow had since dried up following the increase in domestic consumption.

Engro Polymer and Chemicals, despite expanding its PVC capacity late last year, was likely to consider exporting only from July onwards, a source close to the company said.

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By: Ng Hun Wei
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