28 December 2012 03:35 [Source: ICIS news]
By Veena Pathare
SINGAPORE (ICIS)--Prices of polyvinyl chloride (PVC) in the south Asian markets of India and Pakistan are likely to remain upbeat in 2013, sustained by strong demand for the product, industry sources said.
Regional producers in India are optimistic of a positive growth in the PVC market in 2013.
“The PVC resin market is likely to see a double digit growth rate in 2013,” said one of the major regional producers in the country.
With the south Asian PVC resin market dependent on agriculture for the major chunk of resin use, this sector is expected to give a significant boost through increased demand for PVC pipes.
About 70% of the total PVC demand of 2m tonnes/year in India is consumed by the agricultural sector, where the resin is widely used in pipes for subterranean irrigation systems. The infrastructure sector accounts for the remaining 30%.
Demand from the infrastructure sector is also expected to rise from January onwards because of PVC demand for construction projects, according to regional producers.
“The infrastructure segment is expected to boost PVC resin demand from January-onwards, when purchasing activity for a number of government projects commences ahead of the Union budget held annually in February,” said a regional manufacturer of PVC resin as well as pipes.
“Although growth in the infrastructure sector has slowed because of an uncertain economic outlook, government’s spending on agriculture continues to be strong, driving PVC growth,” the producer added.
Meanwhile, offers for US-origin cargoes for January-loading consignments have increased, as sellers anticipate an increase in the US domestic demand because of reconstruction after Hurricane Sandy.
Furthermore, maintenance at a few regional facilities is likely to cause supply to further tighten, affecting export volumes.
Increase in US January offers is accompanied by increased offers from northeast Asian producers for January shipments, and a much anticipated pick-up in demand from January onwards is likely to boost PVC resin prices.
Following the pick-up in demand in the domestic market, PVC prices are expected to increase in 2013.
PVC prices for imported cargoes in India were at $970-1,010/tonne (€728-758/tonne) CFR India for the week ended 21 December, increased by $10/tonne from a week ago.
Regional PVC production accounts for 1.2m tonnes, with imports from northeast Asia catering to the rest.
Meanwhile, in Pakistan, the sole regional producer of PVC expects regional demand to grow, driven by government’s push for infrastructure projects.
Regional demand for PVC is presently at 130,000-140,000 tonnes/year and dominated by the PVC pipes market. The pipes find wide use in agriculture as well as construction sectors.
The producer intends to expand its product portfolio to include newer applications of PVC such as window profiles, window frames and large diameter pipes. Many of which are currently made of stainless steel.
Presently, about 50-60% of the total PVC produced by the manufacturer in the country is used in making pipes and in construction.
“PVC demand in Pakistan is likely to grow in line with the growth in the construction industry, anticipated to increase by 5-6% in 2013,” said the producer.
The company also plans to make a foray into medical grade PVC applications.
“Although a number of these objectives are not likely to be executed in 2013 alone, the year will be a time for the initiation of a bulk of efforts to achieve these targeted objectives,” the producer added.
The Malaysian major producer PETRONAS’ exit from vinyls business in the first quarter of 2013 is expected to cause a dynamic shift in the supply and prices of feedstock vinyl chloride monomer (VCM) across Asia, leading to the Pakistan-based producer to eye VCM exports.
($1 = €0.75)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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