China triples export volume and captures a third of India’s PVC import market share in FY’23

India’s primary producers always claim the dumping of sub-standard Chinese goods into local markets at competitive prices, which in turn takes away the market share of high-quality raw materials from domestic producers and pulls down the quality of final products in circulation. Polyvinyl chloride (PVC) is one such product that has seen a sharp increase in imports into India from China during the financial year 2022-23.

Industry sources said that India’s PVC imports from China have tripled to 645,000 tonnes in the financial year 2022-23 compared to 209,000 tonnes reported in the previous year. With this, China’s share in India’s PVC import market has more than doubled to 33 percent this year compared to 15 percent last year. Apart from PVC, China has supplied a huge quantity of other polymers such as low-density polyethylene (LDPE), for which an anti-dumping duty (ADD) is being worked out.

After two years of pandemic-induced breakdown, India’s PVC import rose by a staggering 37 percent to 1.96 million tonnes in the financial year 2022-23, as against 1.42 million tonnes in the previous year. The report further states that India’s dependence on imported PVC will continue in the future due to the lack of investment from domestic or international players in this sector.

The data further read that India’s overall PVC production capacity will increase by 400,000 tonnes to 2 million tonnes in the next four years i.e. by the financial year 2025-26 from the current output capacity of 1.6 million tonnes. By then, India’s PVC demand would increase by over 24 percent. The report further forecasts that India will be able to see another 2 million tonnes of PVC production capacity, which will go up to 4 million tonnes by 2029-30. Against this backdrop, India’s PVC demand will rise to 6 million tonnes by the end of this decade.

Weak demand in exporting countries

Both China and the United States have witnessed a slowdown in factory activity, a decline in housing sales, and a high unemployment rate, resulting in a slump in their economies. Weakening demand from the domestic sector of China and the United States has prompted manufacturers to push for sales in fast-developing economies such as India. Fortunately, India has continued to absorb surplus materials globally as consumption remains strong

India’s PVC industry had shown a decline in the previous two years due to Covid-19 and supply disruptions. The factors responsible for the strong rebound in PVC consumption are affordable price level, improved construction and infrastructure activities, better availability of resin, the government’s Jal Jeevan Mission, and higher income for farmers.

Significance of China’s PVC industry

China contributes nearly half of global PVC demand. According to a report, China’s PVC demand was estimated at 22.3 million tonnes in 2022, which is six times higher than India’s reported demand of 3.7 million tonnes in the financial year 2022-23. Against a cumulative capacity of 59.8 million tonnes, global PVC consumption was estimated at 46.8 million tonnes in the calendar year 2022, with North East Asia, North America, and Europe together accounting for about 71 percent. Overall, global PVC demand growth is estimated at 2-3 percent in the next five years.

China has emerged as the largest PVC player over the years with significant investments in capacity additions. The country has strategized to become the largest PVC producer and supply of plastic raw materials to the world. According to reports, China contributed 60 percent to the global additions in 2022 and is set to account for 80 percent in 2023. Since PVC production is capital-intensive, creating fresh capacity and becoming self-reliant may be a long-term dream for India.

India’s gross domestic product (GDP) is poised to leapfrog from the current US$3.2 trillion in 2022 to US$32.8 trillion by 2047. Such significant economic growth is expected to support the government’s public welfare plans, such as infrastructure, water supply, modern agriculture, and healthcare, where PVC finds widespread application. India will continue to be an outlier in the global scenario with an estimated 6-7 percent growth in demand in the next few years and will continue to rely on imports despite increased focus on recycling and the circular economy.

Source: Polymer Update