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Indian PVC makers seek immediate curb on cheap imports from China

Petrochemical industry | 17 Aug 2022 14:31 IST | Polymerupdate.com

India’s primary polyvinyl chloride (PVC) producers have urged the government to curb the cheap import of the pipe-making raw material from China due to an unprecedented increase in its import in the last three months.

In a representation addressed to the Union Ministry of Commerce and Industry, India’s two primary PVC producers i.e. Chemplast Cuddalore Vinyls and DCW have said that there has been an abnormal increase in the import of PVC in India in the last few months. Indian importers have been buying a large quantity of PVC mostly carbide-based from China which is a substandard material when compared with ethylene-based PVC. Obviously, the price of carbide-based PVC is much lower than the prevailing market price of ethylene-based PVC.

A separate email was sent to Chemplast Cuddalore Vinyls and DCW did not elicit any response. Reliance Industries, DCM Shriram, and Finolex Industries are other major producers of PVC in India. India meets around 55 percent of its annual demand through imports from various countries including China.

According to an industry official, India imports a couple of thousand tonnes per month of PVC in the normal course which goes up to 20,000 tonnes per month during the peak demand season. “But, the volume of PVC import from China has gone to the tune of up to 100,000 tonnes per month in the last three months at a landed price which works out to 20-25 percent lower than the prevailing market price of PVC in India. This cheap PVC import has been hurting Indian industry very badly and hence, needs to be curbed,” said the official.

The representation further submits that the import of suspension grade PVC resin with residual vinyl chloride monomer (VCM) above 2 parts per million (PPM) jumped 313 percent in the financial year 2021-22 versus the financial year 2020-21. The cheap import of Chinese PVC in India is feared to have piled up inventories in the local markets. If not checked immediately, the inventory would swell to an alarming level.

“It is evident that serious injury to the domestic industry is imminent, should remedial measures not be invoked. Import from China has alarmingly increased to the level where monthly imports already exceed annual import volumes in the past,” said the representation jointly made by Chemplast Cuddalore Vinyls and DCW.

In fact, increasing PVC imports from China has pulled down the volume of imports from India’s inherent suppliers including South Korea and Taiwan. Also, the sudden spurt in imports from China dragged prices of the raw material which is used primarily for manufacturing pipes and fittings, among others. Chinese producers have cut down PVC prices to dump their output somewhere of which India is a soft target. Against broad expectations, Chinese local PVC demand crumbled due to a slowdown in the country’s economy, real estate bubble, Common Prosperity economic reform, and most importantly, a sharp decline in local consumption. Exports to other destinations including the Middle East and Europe also hit badly on account of a spurt in freight rates in the last two-three months.

Data compiled by Polymerupdate showed Chinese producers have lowered PVC prices by around 25 percent in the last two months to quote currently at Yuan 6650 a tonne now from Yuan 8850 a tonne towards mid-June. The decline in Chinese offer price has eroded PVC prices in India among other destinations also. Despite lower prices, Chinese producers have not exercised any production cut, perhaps amid expectations of a rebound in demand from the countries like India.

The continuous surge in imports has swollen inventory with Indian importers and also which has led to the destruction in sales of India’s primary producers. Although, the inventory with Indian importers has not reached the ‘alarming level’, rising import fears a production cut for domestic producers in the medium term.

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