India's ADD proposal continues to echo through PVC markets: World’s largest buyer reshapes global trade

PVC markets have been shaken by the recently announced anti-dumping tariff propositions by India, the world’s largest PVC buyer. India’s S-PVC imports reached an all-time high of over 3 million tons last year, making up approximately 33% of total global trade. Now, players are bracing for significant shifts in trade dynamics as the massive PVC buyer attempts to restructure the landscape, driven by demands from its domestic producers and in anticipation of upcoming capacity expansions within the country.

US producers to face highest provisional ADDs

India announced the new provisional duties with the aim of protecting its domestic industry from cheaper imports, particularly from China, Indonesia, Japan, South Korea, Taiwan, Thailand, and the United States. The anti-dumping investigation was initiated following a petition from three PVC producers—Chemplast Cuddalore Vinyls Limited, DCM Shriram Limited, and DCW Limited—who alleged that imports from these countries were causing significant injury to local producers. The ADDs vary based on origin and producer, with Chinese imports facing duties ranging from $82-167/ton, depending on the specific supplier. Other ADD rates are as follows: Taiwan $25-163/ton, Indonesia $73-200/ton, Japan $54-147/ton, South Korea $51-161/ton, Thailand $53-184/ton, and the United States $164-339/ton, making US producers the most impacted by the new measures.

Short-term repercussions

An Indian trader provided insight into the ADD timeline, noting that while the government notification specifies a 30-day waiting period post-publication on 29th October 2024, which would place implementation around 28th November, the actual start date remains subject to potential adjustments by the government. He advised PVC exporters to ensure any shipments to India arrive before this date to avoid ADD, as any delay could lead to additional duties or cargo rejections if ADD becomes applicable.

Another trader noted that while market conditions are relatively unchanged post-Diwali, many Indian customers are hesitant to finalize orders. “Reports suggest that some Indian buyers have canceled orders or pressured suppliers for price reductions on shipments already in transit, especially those sourced from China, as they seek to avoid or minimize potential ADD costs,” he said.

Impact on key suppliers and shifting trade flows

The new ADDs are expected to significantly affect trade flows, with the highest duties impacting countries like the US and China. According to ChemOrbis data, India imported nearly 2.1 million tons of S-PVC during the first eight months of 2024, with China capturing a substantial 41% share of these imports. Japan followed with 14%, Taiwan 12%, South Korea 11%, the US 9%, and Indonesia 3%.

This heavy reliance on Chinese suppliers places China in a challenging position if the ADDs are implemented, as over half of China’s PVC exports currently go to India. China’s total PVC exports in the first nine months of 2024 surpassed 2 million tons, with India absorbing over 1 million tons. Should the tariffs be implemented, Chinese suppliers may either need to find alternative markets or reduce production to manage an already oversupplied market, which is expected to worsen as China is adding around 3 million tons of new capacity.

Japan and South Korea are similarly vulnerable. For instance, 68% of Japan’s 450,000 tons of PVC exports in the first nine months of the year were sent to India, and South Korea sent 58% of its total PVC exports (470,000 tons) to India during the same period.

The US, the world’s largest PVC exporter, shipped about 2.3 million tons in the first three quarters of the year, with its primary markets being Canada (16%), Mexico (11%), and India (9%). The high ADD rates could diminish the US’s foothold in the Indian market, while the country also faces ADDs from the European Union.

Balancing domestic demand and supply: India’s capacity addition plans

India faces a serious import deficit in PVC, with demand estimated at around 3.5 million tons, far exceeding its current production capacity of 1.7 million tons/year. New domestic capacities are planned between 2025 and 2027, aiming to add over 3 million tons/year. These expansions align with India’s goal of reducing import reliance; however, ChemOrbis analysis suggests that even with these additions, India will likely remain an importer, as total PVC demand is projected to surpass 6 million tons within five years. Consequently, around 1.5 million tons of this demand will still need to be met through imports.

The ADDs on S-PVC imports could encourage Indian plastic converters to favor local production, especially if new domestic capacity offers a cost-effective alternative to imports from Northeast Asia and North America. However, the transition may be gradual as Indian buyers are accustomed to competitively priced imports, especially from regions with lower production costs.