'Artificial raw material scarcity' soars plastic prices, sends market into frenzy
Dec 07, 2020
New Delhi [India], December 7 : A section of plastic traders have resorted to hoarding raw materials -- PVC, Polyethylene (PE) and Polypropylene (PP) and Acrylonitrile Butadiene Styrene (ABS) -- resulting in price surge, causing panic in the market, an industry insider said on Monday.
Some traders are making short-term gains thereby plunging the industry into a crisis and soaring the prices of plastic raw material even as battle against COVID-19 pandemic continues.
"Plastic raw materials such a PVC, Polyethylene and Polypropylene and ABS are being sold in the open market at a substantial premia by a section of large and MSME plastic traders and a few processors-turned-resellers. Their unethical ways have triggered panic in the plastic raw materials market, pushing prices significantly above the list prices offered by resin manufacturers," according to the industry insider.
These traders and processors are allegedly buying very large quantities from domestic market as well as overseas resin manufacturers and claiming substantial volume-based discounts, and selling it to processors at a substantial profit.
Some of the processors are allegedly not converting the raw materials into final products and instead are reselling it to other processors at a premium, making a "quick buck without even engaging in making plastic products".
Domain experts say it has resulted in an artificial scarcity of plastic raw materials and increased incidences of higher prices and squeezing margins for genuine processors.
The international prices for plastic raw materials, which dropped following a steep fall in crude prices, have been recovering from the low levels reached during the peak of the COVID-19 crisis. Experts opine the domestic prices, too, should align with import prices.
However, an industry analyst says some traders and processors are selling a part of their volumes in the open market at huge profits and are artificially shoring up prices by hoarding raw materials.
