India's polymer markets have taken a downturn following the central bank's tightening of trade financing on imports earlier this month, market sources said Wednesday.
Among the key polymers, PVC has borne the greatest impact from the tighter lending policy as the country is highly dependent on imports. India's PVC deficit is estimated at 1.5 million mt/year, according to market sources.
In comparison, other polymers such as polypropylene and polyethylene are less affected due to lower exposure to imports.
According to Japan's Ministry of Economy, Trade and Industry, India's PE deficit in 2018 is estimated at 221,000 mt, while PP surplus for 2018 is estimated at 214,000 mt.
The Reserve Bank of India on March 13 has barred banks from issuing letters of undertaking or letters of comfort for trade credit for imports into India.
India's import demand for PVC has since dried up and prices have fallen sharply to a two-month low of $1,020/mt CFR India on Wednesday, S&P Global Platts data showed.
Market sources said it is "rare" for India's PVC market to ease in the first quarter as Indian buyers typically build up stocks ahead of the monsoon season.
As for PE and PP, Indian buyers have kept to the sidelines this week, as they prefer to keep minimum inventories ahead of end-March financial closure.
Over the week, film-grade high density PE was assessed stable at $1,360/mt CFR South Asia Wednesday, while PP raffia fell $25/mt to be assessed at $1,310/mt, Platts data showed.
Despite bearish demand, a Taiwan-based PVC maker decided to increase its offer for April by $20/mt from March to $1,040/mt CFR India. The producer said slow PVC buying appetite in India would be temporary as India needs to import more than 100,000 mt of PVC each month in order to meet domestic demand.
