EPCL forecasts reduction in PVC price
Ibn-e-Ameer
EPCL management expects that PVC prices will come down as more capacities come online.
EPCL management said in an analyst briefing on Wednesday.
If the global price of PVC comes down due after more capacities come online, it will impact the EPCL price here in Pakistan.
High-Temperature Direct Chlorination HTDC (energy efficiency project) and Hydrogen Per Oxide are likely to come online in 2023.
Anti-dumping duty on PVC imports
It further announced to take up the matter of anti-dumping on import of PVC with the National Tariff Commission (NTC) in case the situation worsens due to the expiry of anti-dumping duty in June this year.
Anti-dumping duty on import of PVC is set to expire this year in Jun-22.
The company will closely monitor the situation and in case if the situation worsens, EPCL will take the issue with National Tariff Commission (NTC), Engro polymer management said in an analyst briefing.
Global PVC prices remained on an upward trajectory during the 4Q2021 amidst longer than expected plant turnarounds. It had also impacted the Engro PVC price locally.
The other factors were disruption caused by climate change and higher freight costs. Going forward, management expects PVC prices to soften as more capacities come online.
Ethylene and EDC prices also increased but at a slower pace compared to PVC mainly due to supply tightness, and increase demand owing to pickup in economic activity post-covid-19.
That said, PVC-Ethylene core delta averaged at US$1,204/MT during 4Q2021 compared to US$800/MT during 4Q2020. Management estimates that core delta will not erode significantly, however, expect some softness.
Regarding the status of upcoming projects, Oxy Vent Recycle (OVR) is nearing its completion which will improve raw material efficiency.
Furthermore, High-Temperature Direct Chlorination HTDC (energy efficiency project) and Hydrogen Per Oxide are likely to come online in 2023.
EPCL’s PVC sales were up by 15% YoY to 55000 tons in 4Q2021 compared to 48000 tons in 4Q2020.
However, QoQ sales were down by 2% amid a slowdown in construction activity. To highlight, 54% of PVC demand is diverted towards the pine & fittings category.
The company’s caustic sales were down by 16% YoY to 16000 tons in 4Q2021, while up by 7% QoQ. The YoY decline is due to the unavailability of products due to plant turnaround.
EPCL faces gas curtailments last year especially in the month of Dec-2021. That said, a reliable supply of gas will continue to pose a major challenge for the company.
EPCL posted the highest ever consolidated quarterly sales and profits of Rs20.7bn and Rs4.7bn, respectively during 4Q2021.
This translates into an EPS of Rs5.2, up 29% YoY. It takes full-year 2021 consolidated earnings to Rs15bn (EPS: Rs16.6).
Along with the result, the company has also announced a final cash dividend of Rs5.5/share, which came higher than industry expectations.
EPCL increases PVC Price
Earlier, Engro Polymer further has increased PVC Resin prices by around Rs140 per bag effective from August 12, 2021. Engro Polymer further had earlier reduced PVC prices by Rs4,000 per ton as margins declined by USD100 per ton in June 2021.
PVC prices in Pakistan were supposed to witness a major decline as the Engro has made a major cut in price for the second time during the month of June 2021 due to a continuous decline in global prices.
Engro Polymer & Chemicals Limited had reduced the PVC price by Rs4,000 per ton. EPCL has so far reduced PVC prices by Rs47,700 per ton in the last two months as private imports of PVC increased due to a consistent decline in international PVC prices.
It is worth mentioning to note that PVC margins were USD940 per ton on 22-June-2021 as per a research note published by a Karachi-based brokerage house.
Earlier, the Engro Polymer and Chemical Limited (EPCL) has reduced Resin prices by approx. Rs. 190 Rs/bag effective from June 3, 2021.
PVC price in Pakistan has been fluctuating keeping in view the revision in global prices.
EPCL reduced its PVC prices by 1,044/bag from April month as PVC prices continued to decline internationally
Earlier, prices of PVC in Pakistan were reduced by 34,000 in one month, mainly due to a reduction in global prices.
EPCL reduce its price for PVC by Rs34,000 per ton from its peak in one month period in Pakistan due to a decline in international prices as a result company margins also declined significantly.
It increased the price of PVC earlier by Rs 17,800 per ton effective from December 10, 2020. It hiked the PVC Resin prices by around Rs. 445 per bag.
Industry officials told News Today that that was a third-time increase that EPCL increased PVC prices mainly due to the global market’s rising trend.
Earlier, it increased its price, the chemical used to produce PVC pipes and other plastic products, by Rs 20,000 per ton. It hiked prices mainly due to a supply shortfall in the global market effective from October 15, 2020.
Engro Polymer had also increased its price for PVC price in the last week of August by Rs6,270/ton.
The prices of PVC had witnessed a rising trend of US$ 55 per ton during early October that was supposed to affect the prices of PVC In the local market.
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.
Engro Polymer has hiked PVC prices by 522-525 Rs/bag effective October 15, 2020.
A market analyst said that this increase in PVC price 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 depleted due to sudden demand. Therefore, the plants shut down due to maintenance. This resulted in supply-demand constraints in the United States (US), and buyers had switched towards China’s market.
READ PVC margins cross $700 per ton
He said that the supply and demand situations would maintain after a short time, resulting in stabilizing PVC prices globally.
The increase was mainly due to supply shortfall internationally and PVC major capacities in the United States starter plant turnaround in Mid- August 2020. In response to plant turnaround in US markets, Turkey has also increased its PVC prices by USD80/ton.
Engro Polymer & Chemicals Limited (EPCL) held a Corporate Briefing Session on October 18, 2021, to discuss the operational and financial highlights of 3Q2021 and the future outlook of the company.
The company reported the highest ever earnings on the back of (1) high PVC-Ethylene core delta, (2) higher volumes due to a new line of PVC, and (3) efficiency gains.
EPCL’s PVC sales improved by 17% YoY to 56k tons compared to 48k tons in 3Q2021, while sales also picked up by 28% QoQ. The company also exported 16k tons of PVC during the same period. To highlight, 56% of EPCL’s PVC sales are directed towards the pipes and fitting category.
EPCL’s market share in PVC stood at 94% in 9M2021 vs. 64% in the same period last year.
The company’s caustic sales were down by 21% YoY to 18k tons in 3Q2021 and also contracted by 17% QoQ mainly due to the annual turnaround on the caustic plant.
The PVC-Ethylene core delta during 9M2021 was US$1,022/ton and the same was US$905/ton in 3Q2021.
A bullish trend in PVC prices is likely to continue in the short to medium term because of tight supply from China owing to the power control policy. The lifting of lockdowns in India has also pulled up the PVC demand.
Hurricane Ida has also severely affected 60% of PVC supply from the US gulf coast.
EPCL management anticipates strong growth of PVC in the global market, but it seems that the domestic offtake is likely to remain under 250k tons in 2021.
Construction work on the announced Hydrogen Peroxide project is going on with a target to achieve COD in 1H2023. OVR and HTDC projects are likely to come online by 2021 and 2023, respectively.
The management refrained from commenting on the future payout policy of the company.
