Polymer Makers Raise Prices Again.

Polymer prices, especially polypropylene (PP), have gone up once again. This is the fourth price rise since January 2011.

Company officials explained the increase has been done to bring about parity with the import prices which have shot up following high feedstock (crude and naptha) prices.

The increase of Rs 2 a kg now puts PP price at Rs 97 a kg. The major petrochemical manufacturers which have increased prices are Indian Oil Corporation, Haldia Petrochemicals, Gas Authority of India Ltd and Reliance Industries.

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.

Incidentally, the demand for PP is yet to catch with the rising prices. "Now PP users have stopped booking imports due to high prices following rising prices of naptha. Naptha prices rose to a two-year high since 2008 to $1,000 a tonne in the Asian market last week. These customers have now switched to domestic companies for procurement. However, due to financial year end closing on March 31, companies prefer to lie lean with minimum floor inventory. The demand is expected to go up after March,&" said an official involved in manufacturing of polypropylene.

He further added that by using the leftover raw material till March end and running a low inventory, the companies using PP as raw material could maintain prices they charge to the end user, thus insulating the high prices from the end use consumption. Or else, the demand from end user could take a hit and thus production will have to be stopped, explained an official in a petrochemical company.

Another official explained that many consumers of polymers are lying low and waiting the prices to come down. "They are not able to pass on these high prices to their end users at this point of time,&" said another official.

Companies on the other hand, are maintaining a parity with the import prices to maintain margins as naptha prices have shot up in the recent past.

"At least by raising prices we can recover losses which we had borne earlier in the financial year. Domestic petrochemical users have resorted to imports since it was cheaper by Rs 1-2 a kg at any given date before the crude and naptha prices started increasing. Thus, domestic companies did not see much demand from the domestic users,&" explained an official.

Domestic manufacturers have been holding on to price revisions for a long time to cope up with cheap imports. In fact, now the prices of imports currently are so high that even after increasing prices for the third or fourth time since January 1, 2011, polymer prices are Rs 4-5 cheaper a kg in the domestic market, said company official.

Source : sify.com