Increasing in PVC and DOP prices, together with lack of supply and stable (if not truly recorded increasing) demands are shocking the converting industries in the field of soft PVC products. The PIMI analysts have surveyed the market and concluded a great threat for this industry.
he PVC industry is a very large and important polymer industry in Iran. Unfortunately, in the soft PVC section, even with the increase of almost all the essential materials required by this industry, we see the closure of some units to this day and if this condition continues the closure of almost all production units could be expected. On Monday, the day of the offering PVC and polypropylene at the IME hall, a total amount of nearly 22,000 tons of commodities were offered, of which only about 8,100 tons belonged to all types of PVC.
Although this week, the competition for all kinds of PVCs, especially the S-57, was not as high as last two weeks, but as with most weeks of the year, PVCs were either sold at a basic price or with a partial competition. In the other hand, the market did not end its struggle to creat kind of a competition and competitions of around 5, 7, 8, and even 10% for all kinds of PVC grades were recorded on Monday May 13th.
In general, over the past three weeks, the PVC market in Iran has suffered a shock, and this shock, also drop in supply along with the relative stable demands have made it possible for PVC product converters to sell their officially allocated shares to the free market. This trend of course was the best way for material producers to supply their products with competitive prices over 42-49% more than official determined prices by PDID. All these events together with the drop in supply for some specific grades, such as the S-57, resulted in the protest of the “Association of PVC Pipe and Fitting Producers” by sending a critique letter of protest to the PDID Office. By this letter the PVC association warned the so called office about the consequences of continuation of this dangerous cndition, especialy with respect to the supply method and has asked for a fair marketing of supplies and demands at the stock exchange.
However, this is not the only problem for the manufacturers of PVC products, especially soft PVC goods. Unfortunately in parallel with the material scenario, the DOP market is also under a serious pressure; Low supply and High prices. In the sense that this material, which is used in many soft PVC applications as an stabilizer, is faced with instant and sudden price increases. Currently, the price of DOP in the free market has reached to Rials 360,000 (about 8.5 US$/ liter) while less than two months ago, the price of this massive chemical in the soft PVC industry – was less than Rls. 110,000. Indeed, this is a factor that the PVC producers are facing with many problems in production. In the past weeks, Iran’s stock exchange has seen a 150% competition over Di-Ethyl-Hexanol supplied by the Shazand Petrochemicals. Whether the Shazand Petrochemicals is stinking or that the problem is deeper, is not temporarily so important for PVC business owners. The important point is that with such unprecedented competitions on last Wednesdays, we are witnessing the incremental trend for DEH prices. And this means an increasing in the prices of almost all the raw materials needed by the PVC converters, especially those producing with plasticized PVC.
TO address the roots of increasing competition for diethylhexanol, one can point to the Shazand PC which at the time that it was one of the major manufacturers and suppliers of this essential chemical for PVC industry, suddenly reduced its supply by half since the end of last year. In the other hand the SPC reduced its 1100 tons supply to only 506 tons. In a simple analysis, this led to a sudden slump in supply and a wide gap between demand and supply. The result of such an approach was to increase competition for the acquisition of the remaining quantities of ethylene hexanol as a result of an increase in the market price. The Iranian stock exchange, which itself sends the pulse to the free market, suggests that there is potential for rising prices for this material on the market. Also, in some cases the military industries, started to purchase this petrochemicals (late in April), which naturally, as a matter of their ever priority, contributed to reducing supply and, consequently, market inflammation.
Of course, Shazand Petrochemical officials are said to be concerned about the price increase of ethyl hexanol and believe that the market inflammation has been due to a lot of complications in recent months and a number of buyers of ethylhexanol on the stock exchange have used this product in various industries, for example, adding to gasoline.
Whatever the reason or the story, something that is obvious, is the threat of shutting down of many PVC converting units in a year that the Supreme Leader named it “The year of production boom”.
Persian analysis edited by: Roozbeh Ramezan Saatchi for PIMI.
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