EPCL increases PVC prices to produce pipes
Aftab Ahmed
Engro Polymer Company Limited (EPCL) has increased its prices for polyvinyl chloride (PVC) ethylene, the chemical used to produce PVC pipes and other plastic products 20,000 per ton.
The EPCL increased prices due to a supply shortfall in the global market effective from October 15, 2020.
The prices of PVC had witnessed a rising trend of US$ 55 per ton during early this month that was supposed to affect the prices of PVC In the local market, forcing EPCL to slash the prices as well.
In Pakistan domestic prices had been witnessing a rising trend in prices. Engro Polymer Company Limited the only PVC producer in Pakistan had made a hike in its prices by Rs22,000 per ton since the last week of August 2020 following an uptrend in the global market.
Sources told Newztodays.com that Engro Polymer has hiked PVC prices by 522-525 Rs/bag effective October 15, 2020.
Following a fresh increase in prices, the new prices had jumped up to Rs 260,000 per ton against Rs 240,000 per ton.
A market analyst said that this increase in PVC prices was short due to the gap between supply and demand in the international market. He said that after the lockdown, the demand rose in the global market, which led to an increase in PVC prices.
He further said that old stocks of PVC had depleted due to sudden demand. They shut plants due to maintenance. This resulted in supply-demand constraints in the United States (US), and buyers had switched towards China’s market.
He said that the supply and demand situations would be maintained after a short while, resulting in stabilizing PVC prices globally.
The analyst further said that price stabilization of PVC in the global market would also impact Pakistan. He said that there were chances that PVC prices in Pakistan would come down in the coming months, pushing EPCL to reduce prices as well.
As per a recent market intelligence report issued by Platts, Westlake Chemical had declared force majeure on August 31 North American polyvinyl chloride and upstream vinyl chloride monomer, with widespread power outages and damage at its Lake Charles, Louisiana, complex leaving production offline for an indefinite amount of time, according to a letter to customers S&P Global Platts obtained.
The force majeure condition had also resulted in supply disruptions and limited manufacturers’ ability to meet anticipated product demand. The prices of PVC continued going after easing in lockdowns, and PVC producers in the US continued seeking an increase in prices of PVC, according to S&P Global Platts.
EPCL is now on the path to meet the total domestic demand of PVC and export the surplus quantity after its expansion; the company will increase capacity to 293,000 tons. A company official told Newztodays.com that they aimed at enhancing capacity before the timeline due to a shortage of commodities globally.
When the coronavirus pandemic outbreak occurred, the world went on lockdown, resulting in economic activities distress. Economic shocks gripped the world in April this year, resulting in lowering the demand for PVC in Pakistan as well. The demand shrunk in the construction industry, hitting EPCL profitability.
Pakistan had faced also faced an economic slowdown. However, the PTI government had announced a bailout package for the construction industry to revive the economic circle.
Following this, the demand in Pakistan also jumped up, and EPCL had also increased prices of PVC following higher demand. The company has also increased prices again, which market experts term a ‘short-term phenomena’ due to demand and supply issues in the global market.
