In fact, prices of polypropylene of imported material shot up by $30 per tonne on a single day from $550 per tonne to $580 per tonne. The landed price in rupee terms works out to Rs 45 per kg. Inspite of the rising imports, prices of the polymer have been on the rise. The main reason for the rise in prices in the domestic market is increasing demand from films manufacture as a result of the buoyant FMCG sector.

Polyethylene prices on the other hand have risen on increased demand from the injection moulding sector. Inventory levels of companies are at its rock bottomwhich industry sources say is likely to keep prices buoyant.

One of the reason for the 22 per cent rise in polymer prices in the last fortnight is the shutting down (annual shutdown) of plants by Samsung, LG and KPIC plants in South Korea and the Equate plant in middle east. Further, demand from China has shown an unexpected rise.

Floods in China has resulted in sudden demand for polypropylene as a result of the polymers requirement for embankment. It may be recalled that China had opened its market in mid August after a prolonged ban on imports due to large scale smuggling in the country. Opening of the Chinese market was likely to absorb 2-3 lakh tonnes of polymers from the market in the initial stage.

Industry sources say that party of the reason for increasing prices is also because of higher prices for its raw material, naphtha, which have increased in line with the prices of crude oil.

Prices of polymers are likely to remain buoyant for atleast two months as till the time the plants that areshutdown come on line. Further demand from China is also likely to subside as their own plants which have shut down will be commissioned. Also, higher prices will attract plants from south east Asia, specially from Malaysia and Indonesia. Expansion of some plants may also go onstream in the near future.

Polypropylene imports soar in H1

Imports of polypropylene in the first six month of the current fiscal have touched 71,500 tonnes as against 110,000 tonnes for the whole of 1997-98. Imports of polyethylene on the other hand have been at around 82,500 tonnes as against 255,000 tonnes for 1997-98. Higher polypropylene imports come despite Reliance expanding its capacity from 90,000 tonnes to 357,000 tonnes in the previous year.

Inspite of the increase in supply, prices are on the rise which industry sources say is a good sign. Polymer industry consumption during the first six month has increased by 14 per cent from 747,000 tonnes to 854,000 tonnes.