India’s polymer demand slowly heals pandemic-inflicted wounds
The demand decline in polymers is clearly represented by ChemOrbis Prize Wizard in the import values of PVC into India. It shows that prices of imports into India, the world’s largest importer of PVC, have slumped 8.2% in the six weeks beginning mid-April. Prices had hit all-time highs right before the downtrend kicked off.
This decline has coincided with India’s second surge in COVID infections that began around mid-March. The second wave increased rapidly, reaching a peak of more than 410,000 recorded daily positive cases in the first week of May. The cases have now reduced and are now below 200,000 on a daily basis.
“We have seen 65-70% of the downstream polymer conversion capacity back on line as the daily pandemic numbers have continued to decrease,” a source from a top refiner said.
“Large-scale units are back up and running at close to capacity but the difficulty is with the small-scale units, which have been facing the problem of labour scarcity that affects operations. Most small units do not want to run their units for fear of getting on the wrong side of law enforcement as there are still restrictions in place,” he said.
The impact of the increase in conversion capacity utilisation on the market may not be felt immediately. “We expect any market impact of the increase in capacity utilisation only in mid-June to mid-July,” he added.
Meanwhile, the slow pace of recovery in the end-user plastic product markets remains a cause for concern. Demand for polymers can improve only if there’s a significant recovery in demand for end-user plastic products.
Lockdowns slowly lift
As cases of COVID-19 begin to show a declining trend, several Indian states have started easing lockdowns and slowly opening up. But many state governments have extended the Covid-19 restrictions with certain relaxations. “Demand is clawing back, but the pace of recovery has not enthused the market,” said a marketing consultant with decades of experience in the Indian polymer industry.
The consultant saw a 10-15% fall in demand for polymers since the second wave struck. This was still an improvement from about a month ago when industry watchers pointed to a 30-40% fall in demand after the second wave of COVID-19 struck the country.
The second wave has left over 10 million Indians jobless, the chief executive of a reputed Indian economic think-tank was reported as saying in the Indian media. “Around 97% of household incomes have declined since the beginning of the pandemic last year,” he added. This points to an economic situation that could make demand recovery of plastic products a persisting issue.
Normal monsoon rains expected this year
Meanwhile, monsoon rains that mark the start of the four-month rainy season have started to reach India since early June, in line with traditional patterns. During the rainy season, India’s PVC demand slows down amid reduced construction activity.
According to weather officials, the country is expected to receive normal monsoon rains this year.
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