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India’s PVC resin industry faces inter-market shift challenge

Petrochemical industry | 13 May 2022 15:23 IST | Polymerupdate.com

When the going gets tough, the tough get going. This famous American proverb written decades ago fits accurately with the polyvinyl chloride (PVC) resin sector in India today.

A recent report by the Chemicals and Petrochemicals Manufacturers’ Association (CPMA) estimated India’s total apparent demand for PVC resin at 2.74 million tonnes in the financial year 2020-21, as per recent data available. Against this, domestic producers together were able to supply 1.37 million tonnes of their cumulative total installed capacity of 1.58 million tonnes in the financial year 2020-21.

The balance, however, around 1.39 million tonnes of PVC resin was met through import. The financial year 2020-21 was an exceptional year for India’s PVC resin market which witnessed a first of its kind export to the tune of 74,000 tonnes, in an otherwise supply deficit market.

“Owing to the closure of factory operations on account of the Covid-induced lockdowns, PVC resin demand in India slumped. But, its demand from non-Covid countries continued to surge which enabled Indian producers to export to overseas buyers,” said a senior official of a large PVC resin producing company on condition of anonymity.

The first wave of the Covid pandemic hit India in February 2020 which prompted the government to impose periodic lockdowns to restrict public movement and also factory operations.

TOUGH RIDE

Polyethylene (PE) in polyvinyl chloride (PVC) zone (‘000 tonnes), FY 2020-21

Particulars

PVC

PE

Agriculture

851

140

Plumbing

298

--

Water supply

267

320

Casing Column

256

--

Soil, Waste and Rainwater pipe (SWR)

184

--

Calendering sector

171

 

Sewerage

125

20

Gas

--

15

Ducting

--

100

Source: Industry


Inter-market shift
In India, PVC resin demand has seen a sharp inter-market shift with polyethylene (PE) gradually making inroads into the PVC consumption areas. For example, total PVC resin consumption for manufacturing pipes and fittings among other articles for use in the agriculture sector was reported at 851,000 tonnes as compared to 140,000 tonnes of PE consumption witnessed in the financial year 2020-21.

In the water supply segment alone, PE has surpassed the consumption volume of PVC resin by a wide margin of 53,000 tonnes. In the financial year 2020-21, the total consumption of PVC resin stood at 267,000 tonnes against the usage of PE at 320,000 tonnes in the same year.

Sewerage is another segment in which PE consumption was reported at 20,000 tonnes in the financial year 2020-21 as compared to 125,000 tonnes of PVC use reported in the year under consideration.

“We have seen increasing use of high-density polyethylene (HDPE) in some areas where PVC resin could have been used otherwise. Now, this inter-market shift poses a big challenge for India’s PVC resin industry going forward,” said the official.


Cheap carbide-based PVC import from China
Most of India’s PVC deficit (to the tune of 1.39 million tonnes in the financial year 2020-21) is met through imports from China. Indian importers procure a large quantity of PVC resin and also finished products, manufactured by using PVC resin as raw material, from China at a discount of nearly US$150 a tonne as they are produced through a coal route there.

This carbide-based PVC is manufactured mostly in China due to the country’s abundance in coal availability. Elsewhere across the world including India, however PVC resin is produced through the ethylene route, and hence, they don’t contain carbide. An industry estimate suggests India imported finished products equivalent to the volume of 564,000 tonnes in 2020-21 which is equivalent to 400,000 tonnes of PVC resin consumption.

According to the official, the carbide-based PVC resin or its finished products would be phased out in India, sooner or later.

Additionally, India imports a huge quantity of PVC resin from Japan with ‘nil’ import duty under the bilateral treaty. India also imports ethylene-based PVC from Europe, Taiwan, and Korea, both directly and indirectly.


Growth drivers
India’s PVC resin market is likely to remain upbeat with 7-8 percent growth in the near future due to increasing demand for pipes and fittings, which consumes nearly 80 percent of the resin’s total availability, following the government’s increased focus on infrastructure and housing sectors. The government’s ‘Nal se Jal’ scheme to supply tap drinking water to every rural household is set to boost India’s PVC resin demand manifold.

Also, its specialized applications primarily in profiles and calendaring segments may provide an impetus to the overall growth in PVC demand in India. There are currently 1000 window suppliers (uPVC producers) in India with overall market size of Rs 6,400 crore and estimated annual growth of 18 percent.

Around 90 producers in the calendering sector consume nearly 171,000 tonnes of PVC resin annually. Of their cumulative installed capacity of 660,000 tonnes. The calendering industry in India is projected to grow by 7-8 percent in the visible future.


DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
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