India Polymer Industry to Take on Rs. 6400 Cr Losses due to Lockdown: ChemAnalyst
by Chem Analyst Chemical Database PriceIndian polymer sector has
witnessed a strong blow since the spread of pandemic as the demand destruction
and logistic restrictions exacerbated a pessimistic industrial outlook. Several
polymer producers had to slash their margins and sell the commodity at record
breaking low prices. Sensing that inventory pile-up may be further hurting, the
polymer producers had to reduce their plant operating rates. India's state
controlled ONGC Petro Additions Ltd. (Opal) curtailed the operations at its
high-density polyethylene (HDPE) and linear low-density polyethylene (LLDPE)
production lines in response to the hit trucking operations. State controlled
refiner, MRPL also shut its 440KTPA PP plant located in Mangalore in late March
after Indian government enforced lockdown to counter the spread of the
coronavirus. Partially offsetting the weakness, the polymers associated with
applications in medical devices like blood transfusion pipes, blood bags,
Personal Protection Equipment (PPE), etc. have shown some strength in demand.
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Polymer industry’s revenue
loss is capped at INR 6400 cr. and job loss at 95-105 thousand employees.
Demand for Polymers has dropped staggeringly resulting in losses. Polymer
industry might see a surge in demand of Polypropylene Non-woven grade for masks
and other hygiene applications. Moreover, Polymer demand in agricultural
applications such as PVC pipes, fillings etc. have seen a modest growth despite
all odds. However, overall performance of the industry is likely to continue
below average. Polymer applications in plastics industry has been impacted due
to low consumer sentiment on buying decisions. Demand for consumer durables
seemed to have faded during the quarter, resulting in inventory pile up across
multiple stages of the supply chain. Thwarted logistics movement has made it
nearly impossible for flow of such inventory. Panicky behavior among consumers
has forced them to hold all purchasing decisions thus impacting the demand for
polymers.
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Housing and construction
activities and automobile sector in the country, the greatest application areas
of polymers, have come to a stand-still, following a plateauing in demand for
plasticizers, Polypropylene, and Polycarbonate. Automotive sales in the country
have dwindled and the automakers promptly shifted their production lines to
manufacture masks and PPE kits instead, thus driving the demand for only
specific polymers. Automotive sales have dropped by dropped by 20 per cent in
the first quarter of FY21. Indian government has recently announced of a
20-lakh crore stimulus fiscal package to revive the spiraling economy. However,
the auto sector needs additional intervening measures to pull it out of the crisis.
Following these micro-trends, polymer industry might see a minor improvement in the overall performance of the industry but for the impact to be tangible it might as well take a whole year for demand to germinate.
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Source: ChemAnalyst
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Created on May 27th 2020 02:59. Viewed 403 times.