Singapore (ICIS)-India’s strong demand for high-density polyethylene (HDPE) pipes may tighten the supply of film and blow-molded pipes, thereby supporting import prices in the short term.
Indian PE manufacturers have been reducing the production of film and blow molding grades, while strengthening the production of pipe-grade materials to generate better net income in the context of strong consumption.
According to ICIS data, since September last year, tight supply has been pushing up the import prices of major HDPE grades in India, and the price of film grades reached a 33-month high in February 2018.
According to the manufacturer, HDPE pipes and required specifications of film and blown grades are produced in separate units, while HDPE/linear low-density PE (LLDPE) swing units produce other HDPE varieties.
According to industry estimates, in the fiscal year ending March 2017, India's consumption of HDPE pipe grades accounted for 9% of its total PE demand of approximately 4.6 million tons.
Due to increased demand in the agricultural sector, India's demand for HDPE pipes has been strong since last year. Therefore, a source from an Indian manufacturer stated that most of the production time of independent facilities nationwide is currently allocated to production pipelines.
"The Indian government's efforts to increase the efficiency of agricultural water use by encouraging farmers to use water-saving and conservation technologies have indeed helped increase pipeline demand," the source said.
Under this initiative, which is listed as a national task project, the government has been promoting the use of drip irrigation and sprinkler irrigation technology, which requires the use of HDPE pipes to transport irrigation water.
In addition, a source from a PE producer in India said that projects led by the state government to provide tap water to households, such as the Bhagirathi project in Telangana and Jeevan Amrit in Rajasthan, have strongly boosted the demand for pipelines in India.
In 2016, as these government-led projects began to gain momentum, India's domestic demand for pipelines increased.
At the same time, Indian producers also have strong export opportunities for high-density polyethylene pipelines, especially in the Chinese market. The Chinese market government mandates the conversion from coal to natural gas power generation, which requires the construction of thousands of kilometers of natural gas pipelines.
Another Indian producer source said: “Indian producers have been able to achieve strong net income in exporting HDPE pipe varieties to China, which limits the attractiveness of producing film and blown grades.”
At the same time, India's demand for HDPE film has been affected by the ban on plastic bags in recent years.
"This makes us think that the profitability of producing HDPE film may be short-lived, prices may reach the upper limit soon, and pipe prices may continue to rise," said a source from another domestic PE producer.
An Indian PE professional intends to produce all grades of HDPE to satisfy a broad customer base, but its plan will be reviewed in the new fiscal year beginning on April 1, 2018 to make room for increased pipeline production in the event of strong demand Space, company sources said.
Featured articles by Veena Pathare
Picture: Plastic pipe. (Photographer: Marion Fichter/imageBROKER/REX/Shutterstock)
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