PVC RESIN REQUIREMENTS INCREASE 2022 ON A REBOUND IN PIPES AND FITTINGS SEGMENT

PVC RESIN REQUIREMENTS INCREASE 2022 ON A REBOUND IN PIPES AND FITTINGS SEGMENT

PVC Resin Demand Growing

India’s demand for PVC resin is to rise by 7-8 percent this year on back of a sharp rebound consumption. Paritcularly from the pipes and fittings segment which consumes nearly 80 percent of the country’s resin availability.

The PVC resin demand contracted by 16% in the financial year  which prompted India’s primary producers to export, albeit in a small quantity. Normally, India is a deficit country for PVC resin and hence, meets around 58 percent of its consumption, through imports. But 2021 came as a dampener for the primary PVC resin producers in India due to Covid pandemic-induced lockdowns 

As a consequence, activities around all infrastructure and housing projects came to a grinding halt. Since consumption in infrastructure and housing projects account for most pipes and fittings products. The demand for PVC resin also got impact as downstream manufacturers did not want to pile up inventories which always carry an additional cost burden.

India’s PVC resin demand in the financial year 2021-22 was highly volatile due to renewed second wave of the pandemic in the first half. The receding number of new pandemic cases towards the end of the September 2021 quarter raised some hopes for a rebound in India’s economic activities. Around the same time, the Indian government started relaxing pandemic restrictions and thus, bringing manufacturing and retail activities back to normalcy. By December 2021 quarter, business activities started normalizing across all sectors which continued even today by virtue of a wide coverage under vaccination.

Import Declines

For the financial year 2020.21, India’s PVC resin output was estimated at 1.37 million tonnes out of its installed capacity of 1.58 million tonnes. While the installed capacity remained at 1.58 million tonnes for the last several years due to the absence of new capacity additions, India’s primary producers reported a total output of 1.41 million tonnes and 1.44 million tonnes for the financial year 2018-19 and 2019-20 respectively.

India is the world’s largest importer of PVC. With domestic production unable to meet consumption needs, processors and converters rely heavily on import market to keep plants running. However, the market plague by an expectedly tight supply in  second half 2020, and prices in spot market have more than doubled since then. Key economic of India is PVC as the indicator as its growth is tied to the gross domestic product with a particular link to demand from the construction sector.

With most economists forecast India’s GDP to grow between 7-9 percent, with the Reserve Bank of India (RBI) forecasting at 7.2 percent, India’s PVC resin demand to grow hand in hand with India’s GDP.

Indian conglomerate Adani Group has chalked out plans to build a 2 million tonnes per annum coal-to-PVC plant at Mundra in Western Gujarat at an investment of US$ 4 billion (~Rs 300 billion) which will bridge the country’s demand-supply gap.