BIS out of the way for now, Asian PVC players to vie for space in India

A four-month reprieve from an expected government move to bring PVC and PP molding under certification by the Bureau of Indian Standards (BIS) may bring back Asian buyers and sellers who had been holding off, watching how the development would unfold.

“This provides breathing space, as an August imposition would have made it difficult for many suppliers to import to India. A number of buyers and sellers in India had stayed away, expecting the certification to take effect. They may now return,” said a Mumbai-based trader.

He did not expect the move to have a material impact on the PVC market in the near term, saying, “Yes, we know buyers will return, but more shipments are likely to be released to the market by sellers, both emboldened by the extension of the deadline. This may mean that bearishness could continue in the PVC market.” He anticipated that Asian PVC sellers would compete for space in the Indian market in the coming months.

Players see no near-term impact

The recent Indian government decision to delay the BIS certification for PVC may not have a near-term impact, given ample supplies in both China and India, along with sluggish demand. However, it certainly has the potential to halt carbide-based PVC imports, particularly from China, once it comes into force, according to industry players.

The government notification regarding BIS certification for PVC and PP molding and extrusion was first issued in India’s government gazette in late February. The enforcement of the certification was scheduled to take effect at the end of August, 180 days from the date of publication in the gazette.

Will the Dec 24 deadline be met?

However, few players expect the government to strictly meet the December 24 deadline. In recent weeks, there has been market speculation that BIS investigators requested the government to extend the certification launch for PVC by about one year to facilitate a thorough investigation.

“Typically, extensions on BIS certifications are granted for a period of six months, but the investigators have asked for a one-year extension. This reflects the enormity of the task assigned to them,” said a trader based in New Delhi.

Compliance investigations take time

The investigators are expected to visit the plants of suppliers to India to inspect compliance with BIS standards. “This will take a considerable amount of time, as the inspections need to be coordinated at convenient times for both the investigators and the plants,” noted a Mumbai-based trader.

The certification’s launch would effectively ban carbide-based PVC, particularly from China, which typically has a VCM content of more than 2 parts per million (ppm). The BIS specifications prescribe a VCM content of less than 2 ppm. However, traders also pointed to some Chinese ethylene-based PVC grades that have VCM content above the specified limit.

“Until last month, we knew that not many producers, except for two or three plants in China, had managed to tweak their configurations to conform to the required specs,” said the Mumbai-based trader. “Additionally, a US producer in close contact with us mentioned that investigators have yet to visit them, and they are unaware of when BIS is expected to do so,” he added.

As imports surged, India had to act...

Many suspect this move was prompted by pressure from major PVC producers in India to restrict the unfettered flow of imports from China. India’s PVC imports reached a record high of slightly more than 3.2 million tons in 2023 , up 71.8% from the previous year. Of this total, India’s PVC imports from China stood at 1.1 million tons, more than double the 543,091 tons imported a year earlier.

Other production hubs, particularly in the US, may also produce higher-VCM-content PVC. The Mumbai-based trader, a regular supplier of US shipments to India, noted that most of the high-VCM grades produced in the US are absorbed locally and only appear in international trade during periods of local oversupply or when import demand surges.

The international political angle

The Indian government may also have to consider potential international political backlash once the BIS certification is enforced for PVC. “Beijing, for instance, may not sit idly by if a significant portion of its PVC exports are blocked from the Indian market. They may choose to retaliate,” warned the Delhi-based trader.