SINGAPORE (ICIS)--After close to two years of relatively lacklustre performance, demand for impact (block) copolymer in India is poised to bounce back, boosted by a recovery in the automotive sector.
Sales of various auto companies have begun to improve from July, after reports of reaching almost zero during the full-fledged lockdown enforced as a result of the coronavirus pandemic in March-June this year.
This was the first time in the history of the Indian auto sector that all manufacturing plants had completely shut down operations during the lockdown months.
A sharp decline in the growth of the auto component industry also emerged as a result, as OEM (original equipment manufacturers) sales slumped with declining two- and four-wheeler sales.
Earlier this month, the Automotive Component Manufacturers Association of India (ACMA) announced a decline of 11.7% in the turnover of the automotive component industry for the fiscal year 2019-2020, over the preceding year.
Demand for PP impact copolymer was affected as a result, as it is widely used in automotive components such as bumpers, door trims and instrument panels.
India PP copolymer imports
Source: Indian Commerce
Although automobiles see the usage of several different types of plastics in a single vehicle, PP alone accounts for 30-50% of all the plastic materials, due to its mechanical properties and mouldability.
July was deemed as a month of recovery, as many manufacturing plants across India resumed operations, even if not at full capacities.
According to industry sources, auto sales figures for July rose over the previous month, lending some stronger expectations of the sector’s performance in the second half of 2020, even though year-on-year growth figures were less encouraging.
The festive season in India that begins in August is likely to see this trend sustaining, with expectations of passenger vehicle sales staying strong until Diwali.
“Auto companies in India have asked OEM manufacturers to gear up to an uptick in orders, as they project strong two-and four-wheeler sales in the run-up to Diwali,” an Indian PP copolymer importer said.
One of the major drivers for this demand resurgence, according to the importer, is the lack of consumer comfort and confidence in usage of public transport during the pandemic.
“People have been saving more and spending conservatively during the lockdown months, which means there is more money available to spend on a car or a motorcycle,” the importer said.
According to one regional trader, job losses in the polymer industry were relatively limited compared with many other industries in the country.
Although banks continue to be conservative after the Yes Bank crisis earlier this year, consumer lending has not seen significant impacts provided sound credit history and regular payment cycles, the trader said.
There remains cautious optimism on the demand trajectory going forward, but production plans and supply chains have the opportunity to become more agile and adapt to the new market conditions, according to market sources.
Focus article by Veena Pathare
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