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Cheap polymer imports from China, threatens Indian producers’ price sustainability

On Thursday, April 28, 2022 at 05:05 IST

Indian traders and consumers have intensified their imports of polymers from China in a bid to take advantage of the price fall there on account of falling demand due to domestic factory closures in the pandemic-induced lockdowns.

Informed sources said that a huge quantity of polypropylene (PP) and polyvinyl chloride (PVC) have started coming in from China at prices which are 4-6 percent lower than the current prevailing rates in India.

In the last few weeks, the coronavirus situation in China has reportedly worsened. In China’s most populous city, Shanghai, deaths have resulted in a strict lockdown and amid rising fears of a further escalation, local authorities in Shanghai and other major business cities have started to conduct three rounds of Covid testing.

With this, the Chinese authorities have imposed strict lockdowns across major cities including Shanghai resulting in various factories undergoing temporary closures and production cuts. Thousands of small and medium-size polymer processing units are said to have shut down which eventually has resulted in a spurt in supply of PP and PVC in China. With primary producers’ storage facilities running full, they are offering price discounts to Indian importers in an attempt to free up space in their storage tanks.

According to trade sources, the import of PP and PVC works out to be cheaper by 4-6 percent even with the ruling high freight rates. Traders, however, do not term the current import as dumping, though. Both PP and PVC prices have declined by 6-8 percent in China in the last month. In fact, PVC imports into India from China had started increasing since the government of India rescinded anti-dumping duty on it in January this year. But now, Chinese PP is also being pumped into the Indian markets.

“Indian importers had placed their orders about 40-45 days ago, but consignments have started coming in now. With the Covid scenario worsening day by day in China, the overall polymer markets there have gone into uncertainty. But, India’s import has not reached an alarming number yet. This is just the beginning. Nobody knows whether it will continue for long,” said Surendra Sharda, Director, Accura Polyplast Pvt Ltd, an Ahmedabad-based manufacturer of BLP brand PVC pipes and fittings.

Trade sources said that large PP producers in China have been aggressively pushing product to Indian buyers as these company's are finding few takers in the local markets. China’s small traders and producers are offering PP and PVC to Indian buyers at a price that stands significantly lower than the current trading price in India.

To counter China’s discount offer, however, Indian primary PP and PVC producers have offered a periodic price protection scheme under which any correction in domestic markets will be offset to the buyers either towards the end of the scheme period or the financial year. The price protection scheme by Indian producers, however, is expanded to other segments including LLDPE, LDPE, HDPE, and resins of other types also, according to trade sources.

Confirming a sudden surge in polymer import from China, a senior industry official said on condition of anonymity, “Indian importers see the current benefit in the raw material pricing. The benefit of the price protection scheme offered by local producers often does not benefit much. Hence, traders are pushing for imports more than buying from local manufacturers.”

Meanwhile, India’s bilateral trade has favoured China despite speed breakers imposed and ‘Make in India’ promoted. Data compiled by the Directorate General of Foreign Trade showed India’s exports to China rose by 21 percent to US$ 22.9 billion in the calendar 2021 while imports surged by 49 percent to US$ 87.5 billion during the same year.


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