The bulk price for EDC (Ethylene dichloride) has increased by Rs. 4-5 per kg over the past two months in Mumbai to current trading levels of Rs. 36-37 per kg. There is a market expectation that these prices will further gain momentum in near future due to limited stock supplies. Indianpetrochem spoke to traders and end-user customers to understand the implication of this market trend on PVC prices in India.
Based on pricing data gathered by Indianpetrochem, its understood that the prices for EDC have witnessed a bull rally since December, 2013. The South East Asian and Far East Asian benchmark prices were at $ 414 per metric tonne on 12th December, 2013, these prices reached $ 484 per metric by 13th February 2014.
As of 27th February,2014, the benchmark price for EDC in South East Asia and Far East Asia was at $ 494 per metric tonne and $ 504 per metric tonne, respectively.
The prices of EDC has continuously been escalating in the Asian markets due to high upstream cost, specifically Ethylene (Read Newsclip: Ethylene- derivative to remain costly in India on new cracker shut-downs being planned in Asia).
According to APIC publication, the installed capacity for EDC is at 365, 000 metric tonne in India. This capacity is captively used by polymer manufacturers in India for production of PVC. Hence, most of the local manufacturers, especially those companies which aren't vertically integrated in the oil and gas sector like RIL, are completely dependent on EDC imports from countries such as Iran and Qatar for manufacturing PVC resins and related compounds.
Indianpetrochem spoke to some traders in Mumbai market and understood that EDC prices are expected to spike up due to limited stock position in the domestic markets and high international booking price.
" There are limited players (traders) for EDC in the market and currently there is a huge shipment gap for imports to India. In this scenario, there is a general market expectation the price should shoot to levels of Rs. 40- 42 per kg for the petrochemical in the foreseeable future", a trader told the website.
Indainpetrochem spoke with an end-user industry, local PVC manufacturer, and understood that there is no indication that this price hike will be passed to the customers as the demand for PVC is globally and domestically feeble.
In this context, a PVC trader told the website, "The demand for PVC resins is sluggish in India as the polymer is currently selling at high prices while the stock inventory is good. The demand for PVC pipes is usually low during this time of the year and its expected that the demand will gain momentum by summer season".
The hike in EDC prices in India will impact local PVC producers who aren't vertically integrated in upstream oil and gas sector. However, the rise in price will not be passed to end-user customer of PVC as the demand is dull. As such, there is an indication that this price hike will severely affect the margins of small PVC manufacturers in India.
By Ntasha Berry (ntasha.berry@indianpetro.com) and Arjun Kumar (arjun.kumar@indianpetrochem.com)
Based on pricing data gathered by Indianpetrochem, its understood that the prices for EDC have witnessed a bull rally since December, 2013. The South East Asian and Far East Asian benchmark prices were at $ 414 per metric tonne on 12th December, 2013, these prices reached $ 484 per metric by 13th February 2014.
As of 27th February,2014, the benchmark price for EDC in South East Asia and Far East Asia was at $ 494 per metric tonne and $ 504 per metric tonne, respectively.
The prices of EDC has continuously been escalating in the Asian markets due to high upstream cost, specifically Ethylene (Read Newsclip: Ethylene- derivative to remain costly in India on new cracker shut-downs being planned in Asia).
According to APIC publication, the installed capacity for EDC is at 365, 000 metric tonne in India. This capacity is captively used by polymer manufacturers in India for production of PVC. Hence, most of the local manufacturers, especially those companies which aren't vertically integrated in the oil and gas sector like RIL, are completely dependent on EDC imports from countries such as Iran and Qatar for manufacturing PVC resins and related compounds.
Indianpetrochem spoke to some traders in Mumbai market and understood that EDC prices are expected to spike up due to limited stock position in the domestic markets and high international booking price.
" There are limited players (traders) for EDC in the market and currently there is a huge shipment gap for imports to India. In this scenario, there is a general market expectation the price should shoot to levels of Rs. 40- 42 per kg for the petrochemical in the foreseeable future", a trader told the website.
Indainpetrochem spoke with an end-user industry, local PVC manufacturer, and understood that there is no indication that this price hike will be passed to the customers as the demand for PVC is globally and domestically feeble.
In this context, a PVC trader told the website, "The demand for PVC resins is sluggish in India as the polymer is currently selling at high prices while the stock inventory is good. The demand for PVC pipes is usually low during this time of the year and its expected that the demand will gain momentum by summer season".
The hike in EDC prices in India will impact local PVC producers who aren't vertically integrated in upstream oil and gas sector. However, the rise in price will not be passed to end-user customer of PVC as the demand is dull. As such, there is an indication that this price hike will severely affect the margins of small PVC manufacturers in India.
By Ntasha Berry (ntasha.berry@indianpetro.com) and Arjun Kumar (arjun.kumar@indianpetrochem.com)
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