Indian probe on PVC with high residual VCM content to hit imports from China

India has initiated an investigation on imposing safeguard duties with a view to restrict imports of PVC suspension resins with residual vinyl chloride monomer (VCM) content above 2 parts per million, according to a notification by the Ministry of Commerce and Industry. Market players expect it to hit PVC Chinese imports into India.

The Ministry was acting on a petition from two domestic PVC producers who alleged there has been a surge in PVC imports to India in 2021-22 that has started causing serious injury to the domestic industry, the notification, issued on September 16, highlighted.

Successive price cuts hit domestic producers

The gazette notification from the ministry pointed to “successive” price reductions on PVC imports to India that have constrained the domestic producers sometimes to cut prices “even within a month” and have meant “significant price-undercutting”.

Players expect the investigation to recommend safeguard duties from the date the investigation was announced. This could effectively shut out imports of Chinese acetylene-based PVC to India, they said.

“Till about a month ago, more than 50% of the Chinese PVC imported into India was acetylene-based. We expect the investigation to recommend safeguard duties with effect from the date the notification for the investigation was made last week,” he added.

PVC import bookings from China being cancelled

In China, acetylene is generated by the hydrolysis of calcium carbide produced by heating lime and coal-derived coke in a furnace. “In most cases, if not all, PVC produced through the carbide route have a VCM content of more than 2ppm,” an Indian trader said.

Chinese traders have already reported receiving requests to cancel recently-booked PVC from Indian importers. “There is also concern of Customs authorities in India checking the VCM level of every lot of imports, ending up in delays in clearance. The Customs will need to check PVC from all sources, but China will definitely be out of the picture as far as imports to India are concerned,” an Indian trader said.

Indian players have been keeping away from Chinese offers because of the threat of safeguard duties being considered by the Indian government in recent weeks. “There have been limited Chinese shipments to India in the past month as people have been expecting the government to announce an investigation. We expect a safeguard duty to be imposed shortly,” he added.

Indian importers from China may keep away

“Done deals for Chinese shipments to India have been limited,” said a producer in China. “We expect players to continue staying away from PVC offers from China in the coming term,” he added.

Industry observers say China has valid economic reasons for sticking with the calcium carbide route to PVC. China has vast coal and lime resources necessary for the production of calcium carbide. In contrast, it does not have the abundant supply of ethylene required for making PVC via the petrochemical route that the rest of the world uses.

While some players expected the safeguard duties to be announced within a month, others said it could take up to four months. “This is expected to be a precursor for anti-dumping duties that could be notified after a wider investigation in the next eight to 12 months,” he added.