Date:18/04/2007 URL: http://www.thehindubusinessline.com/2007/04/18/stories/2007041801892100.htm

Back PVC pipe makers face short supply of resins

G. Gurumurthy

Organised and small-scale units will have production problems

Coimbatore April 17 After witnessing a bland market growth for more than a year, PVC pipe manufacturers in Tamil Nadu this year have pitched for a market growth between 5 per cent and 8 per cent.

But their worry appears to be shortfall in the availability of their primary raw material, PVC resins, used in the manufacture of PVC column pipes that go into irrigation/agriculture application.

" The anticipated growth in PVC pipe demand and 10 per cent shortage in the availability of indigenous supply of PVC resins will have production constraints to that extent on both organised and small time PVC pipe manufacturers," said Mr M. Palanivelu, President of the Tamilnadu ISI PVC Pipe Manufacturers Association.

The shortage in raw material has, according to him, contributed to surge in price. As against the average price band of Rs 52,000-54,000 per tonne, the current price for PVC resins has shot up to Rs 58,000. This hashit the small-scale manufacturers.

The annual consumption of resins by PVC pipe producers is said to be around 9 lakh tonnes. While Reliance Industries Ltd is the major supplier of resins, accounting about 60 per cent or so of the domestic demand, the other resin manufacturers such as Chemplast, Drangadhara Chemicals, and Phynolex meet about another 30 per cent, leaving the gap to be bridged through imports.

But this time, the market anticipates the shortage to go little higher in view of the dislocation in supply from indigenous route on account of production bottlenecks faced by one or the other producer late last year affecting their supplies.

Lack of price parity

Though the pipe manufacturers have the import option, lack of price parity, especially while importing small quantities by the smaller players nullifies this option. The organised and small-scale PVC pipe manufacturers in Salem, Erode and Coimbatore besides those in Chennai sway the State's irrigation/drinking water PVC pipes market.

An estimated 200 or so PVC processors in Erode/Coimbatore zone are engaged in this line of trade. The current uncertainty over the availability of resins has slowed down the production by 30 per cent among the units producing PVC pipes in the Erode/Coimbatore region, said Mr Mahalingam, Managing Director of Ariya Plastics at Perundurai.