Special Plans On Offer For Polymer Buyers.

Petrochemical manufacturing companies have started offering price protection schemes to lure buyers in a dull market. It began last month with polypropylene and is to be extended to polyethylene.

“The demand for polymers is slack and inventory is lying unsold, following a global slowdown and lean phase in the domestic market. Buyers, therefore, have been postponing purchases, anticipating further decline in prices, and are using their existing inventory. This scheme is to make buyers purchase the product and, at the same time, offer them a sense of security towards further price revision downward during the said period,” explained a company official.

Under the scheme, once a customer has bought a product, he will be compensated for any loss if the company decides to further bring down prices within that week or month.

Further, major polymer manufacturers Reliance Industries, Indian Oil Corporation, Haldia Petrochemicals and Gas Authority of India Ltd have revised prices downward after increasing it four to five times since January. Since May, manufacturers have brought down prices by Rs 3-5 per kg twice. Currently, polypropylene prices are Rs 85-90 per kg, while polyethylene is available at Rs 72-75 per kg.

Polypropylene is used in a variety of day-to-day products, from high-tenacity cement and fertiliser bags to tough fibres such as films and containers. Linear low density polyethylene or LLDPE is used mostly for plastic bags and pouches. Demand is not picking up following the stringent environmental norms for usage of plastic bags in February. 2011. LLDPE is one of the most popular variants of polyethylene, produced under low temperatures and used for plastic bags and sheets, plastic wraps, stretch wraps, pouches, toys, covers, lids, pipes, buckets, containers and the covering of cables.

The heavy dependence on imports changed with the increasing price of naptha, which rose to a two-year high of $1,000 since 2008 and this made import of polymers very expensive, resulting in a shift of consumers to the domestic market, officials said. Domestic petrochemical users have resorted to imports, since it was cheaper by Rs 1-2 a kg at any given date before crude and naphtha prices started increasing. Companies, on the other hand, are maintaining parity with import prices to maintain margins, as naphtha prices have shot up in the recent past.

“At least by raising prices, some losses incurred earlier due to imports were recovered. Since May, domestic users could not take any more price increase and stopped increasing inventory. We have to bring down prices under current circumstances,” explained an official.

Source : Sify.com