India’s construction boom continues and pipe manufacturers are steadily expanding capacities.
Finolex Industries has plans to double its pipes capacity at Ratnagiri, Maharashtra, in phases to 200,000 tonnes/year over the next three years. The first phase will see an expansion by 30,000 tonnes by end-2007.
In an interview with ICIS news, a senior company official also said that the company was looking at building a new facility in northern India.
Besides construction, the agricultural sector is also driving expansions.
Jain Irrigation has announced plans to invest Rs400-500m in a new pipe and drip irrigation facility in Tamil Nadu and another in north India in the next six months.
These expansions will fuel PVC demand in the coming years, which is currently growing at about 15%/year. Pipes accounted for about 70% of India’s PVC consumption of about 1m tonnes in 2006-07.
Indian PVC capacity of around 1m tonnes/year falls short of demand. Finolex manufactures 260,000 tonnes/year PVC at Ratnagiri, but it also plans to import 75,000 tonnes in 2007 and 120,000 tonnes in 2008.
Reliance Industries, the country’s largest PVC manufacturer, also started importing PVC this year.
The deficit is likely to continue as the only new plant on the Indian horizon is Chemplast Sanmar’s 200,000 tonnes/year project at Cuddalore, Tamil Nadu, that is due to be completed in mid-2008.
The deficit has stimulated interest in new PVC projects but viability has been hard to justify due to feedstock constraints. One company that had looked at building a plant based on imported VCM or EDC decided to drop the project because of stiff competition from Chinese carbide-based PVC. Another company, fresh entrant to the PVC business, has the chlorine but is unsure if the project would be viable if based on imported ethylene.
Reliance is of course in the best position to add volumes. It has ethylene in its system. Company officials have said that a PVC and chlor-alkali project are being evaluated. But we are still waiting for a formal announcement.