Indian Polymer Market Rises Amid Duty Hike Speculations and Tight Supply Dynamics

Key Highlights:

1. Polymer prices varied regionally, with PP Film at ₹97.50–₹100/kg and PVC at ₹75–₹77/kg across Ahmedabad, Delhi, and Hyderabad.
2. Speculative inventory buildup ahead of a potential duty hike from 7.5% to 10% intensified demand.
3. RIL posted a 2.3% YoY EBITDA rise in Q3, supported by higher production and polymer demand.
4. Upward price trends expected, with an additional $50–60/MT increase projected by mid-February 2025.

Polymer Price: Regional Price Trends Across Ahmedabad, Delhi, and Hyderabad

• Polymer prices across Ahmedabad, Delhi, and Hyderabad showed notable regional variations on January 16, 2025. In Ahmedabad, PP Film (HMEL) was priced at Rs. 97.50/kg, while PVC (RIL) was Rs. 77/kg, and LDPE Film (Reliance) reached Rs. 112/kg. 
• Delhi recorded slightly higher PP Film prices at Rs. 100/kg, with PVC at Rs. 75/kg and LDPE Film at Rs. 112/kg. 
• EVA grades in Delhi ranged from Rs. 110.50 to Rs. 114/kg. Hyderabad followed a similar trend, with PP Film priced at Rs. 100/kg, PVC at Rs. 75/kg, and LDPE Film (RIL) at Rs. 117/kg.

Government Policy Speculations Fuel Market Dynamics

• The Indian polymer market is currently experiencing significant shifts, driven by speculative anticipation of government policy changes. 
• Traders are aggressively accumulating inventory in response to the expectation that the Government of India may introduce a duty hike in the upcoming fiscal budget. 
• The proposed increase, which could raise rates from 7.5% to 10% (adjusting the effective rate from 8.25% to 11%), is speculated to target materials that fail to meet BIS standardization by the specified deadline. 
• This potential regulatory move has created heightened demand in the open market as buyers act preemptively.
• Meanwhile, supply from international suppliers remains constrained due to reduced netbacks in the Indian market. 
• Companies like RIL, which rely on multi-feed production, are grappling with historically low margins and a diminished product-feed delta compared to their five-year average. 
• These factors have limited supply availability, contributing to the upward price movement in the domestic market.

Polymer News: Reliance Industries Reports Q3 EBITDA Growth Amid Market Shifts

• Reliance Industries Limited (RIL) saw a 2.3% year-on-year rise in EBITDA for its O2C business in fiscal Q3 ending December 31. The growth was supported by higher production volumes, robust polymer demand, and increased ethane cracking. Sales rose by 6% during the quarter.
• Toagosei has announced the termination of its PVC contract manufacturing operations for Kaneka, marking a shift in its production strategy.
• TotalEnergies highlighted continued weakness in chemical and refining margins during Q4 2024. The downbeat performance aligns with recent outlooks from other industry players, indicating sustained pressure in the sector.
• Repsol reported narrowing petrochemical margins for Q4 2024, marking a decline over the past two quarters. While full-year margins showed a slight increase, it was from a previously low base, reflecting lackluster market fundamentals.
• Nigeria's Dangote Refining Complex is set to commence polypropylene production in early February 2025. This development aims to reduce the country’s reliance on PP imports.
• Borealis has declared force majeure on HDPE pipe supply from its Stenungsund facility in Sweden due to technical issues. The outage specifically impacts crosslinked polyethylene grades, with no timeline for resolution announced yet.

Market Expectations: Global Supply Issues and Regional Impact

• The open market has already seen a price increase of $80–100/MT since December 2024 lows, driven by escalating cost pressures. This upward momentum is expected to persist through mid-February 2025, with a projected additional price increase of $50–60/MT (₹3–4/kg).
• The market is also closely monitoring the government's fiscal budget announcement, as a potential duty hike targeting non-BIS-compliant materials could create further ripples across the supply chain. Such a measure is likely to accelerate compliance efforts while maintaining upward price pressure on polymers in the near term.