Indian plastics manufacturers seek aid as prices surge

India's plastics manufacturers are urging government intervention on the back of rising costs of raw materials in domestic polymer markets.

The All India Plastics Manufacturers' Association (AIPMA) appealed to prime minister Narendra Modi to intervene, claiming that price hikes by domestic polymers producers have been "exponential" and are "threatening the survival of thousands of plastics processing plants in India".

Some of the raw materials cited include polyvinyl chloride (PVC), high-density polyethylene (HDPE), linear low-density polyethylene (LLDPE) and polypropylene (PP).

Price increases have exacerbated working capital and financial issues brought about by the current Covid-19 pandemic, AIPMA said. Raising prices of finished products are impossible because of weaker demand caused by the coronavirus.

AIPMA also claimed producers are exporting raw materials in large quantities, creating a shortfall in domestic markets. PP exports from India rose by 94pc during January-August compared with the same period in 2019.

Plastics manufacturers now face competition from increased imports, along with reduced exports of intermediate and finished material. The higher domestic prices have also made plastic goods exporters less competitive, as AIPMA claimed that polymer prices are "10-15pc cheaper" in foreign markets compared with India.

AIPMA proposed that a petrochemical regulatory authority be set up to oversee polymer markets to "curb the consortium" and ensure no "undue profiteering" persists. It wants the government to investigate the alleged artificial increase in prices of raw materials nationwide.

It also asked to the government to stop the imposition of anti-dumping duties, mandatory Bureau of Indian Standards (BIS) and a ban on the export of raw material from India.

The BIS requirements are manufacturing standards that foreign companies must meet to continue exporting to India. Products have to go through stringent checks to ensure that they comply with the standards set out by BIS. This process lengthens the time taken for imported products to reach buyers, adding to the scarcity currently faced by plastics manufacturers.

Rising shipping costs and a limited availability of offers to south Asia saw cfr prices rise in India last week. Low-density polyethylene (LDPE) film prices rose by $100/t to $1,210-1,230/t cfr India. LLDPE film and HDPE film rose by $40/t to $970-990/t cfr India and $1,050-1,070/t cfr India respectively. PP raffia rose by $30/t to $1,080-1,100/t cfr India. PVC pipe prices rose by $30/t to $1,240-1,260/t cfr India.

Key producers from the Middle East are still making their offers to south Asia. Prices are expected to continue rising as producers continue to focus exports to southeast Asia and northeast Asia, where they can obtain better netbacks because of rising regional feedstock costs.

Indian producers also raised domestic polyethylene and PP prices last week in response to the increased import offers to India. PP prices were increased by 2,000 rupees/t ($27/t) across all grades. LDPE prices for all grades were raised by Rs7,500 rupees/t, while LLDPE film and HDPE film prices rose by Rs3,000/t.

By Matthew Rajendra