Search the Internet          Tips  Sites: Finance, Investment

Sector Focus: Basic Petrochemicals And Polymers

Basic petrochemicals and Polymers: State of the industry (2000-01)

Petrochemicals: Tariffs, prices and landed costs

	Tariffs (per cent)				Prices (Jan 2001)				Landed costs (Rs/ton)
	Customs		Excise		Domestic		Intnl.		Pre-budget	Post budget
	00-01	01-02	00-01	01-02	(Rs/tonne)		($/ton)
hdPE (IM)	44.0	40.4	16.0	16.0	47,908	1	618		49,073	47,833
ldPE	44.0	40.4	16.0	16.0	49,200	1	700		55,629	54,224
lldPE	44.0	40.4	16.0	16.0	49,300	1	633		50,265	48,995
PPHP (IM)	44.0	40.4	16.0	16.0	43,268	1	575		45,696	44,541
PVC	44.0	40.4	16.0	16.0	45,124	1	588		46,689	45,509
PS (GP)	44.0	40.4	16.0	16.0	61,480	1	715		56,822	55,386
ABS	44.0	40.4	16.0	16.0	73,000		956		65,515	63,860
SBR (1502)	44.0	40.4	16.0	16.0	54,000		950		65,084	63,439
PBR (1220)	44.0	40.4	16.0	16.0	63,220		900		61,658	60,100
EDC	21.2	19.6	16.0	16.0	22,625	1	190	2	16,712	16,497
VCM	21.2	19.6	16.0	16.0	n.a.		400	2	30,750	30,354
Styrene	21.2	19.6	16.0	16.0	50,250	1	622		45,570	44,983
Ethylene	21.2	19.6	16.0	16.0	31,500		443	2	28,427	28,061
Propylene	21.2	19.6	16.0	16.0	36,000		410	2	26,508	26,167
Butadiene	21.2	19.6	16.0	16.0	35,000		517	2	32,657	32,237
Benzene	21.2	19.6	16.0	16.0	23,000		371	2	24,843	24,523
Toluene	21.2	19.6	16.0	16.0	20,700		303	2	20,331	20,069
Naphtha	5.0	5.0	16.0	16.0	10,860		259		12,945	12,945

ABS: Acrylonitrile butadiene styrene; EDC: Ethylene dichloride; hdPE: High density polyethylene; IM: Injection moulding; ldPE: Low density polyethylene; lldPE: Linear low density polyethylene; PBR: Polybutadiene rubber; PPHP: Polypropylene homopolymer; PS (GP): Polystyrene (general purpose); SBR: Styrene butadiene rubber; VCM: Vinyl chloride monomer.
n.a.: Not available
1 Market prices; 2 Fob prices
Note
Anti-dumping duties on PS and SBR have not been included in the landed cost, as they vary by country.
Source: CRIS INFACŪ

• In 2000-01, demand for various commodity polymers is expected to increase by 3-17 per cent. However, growth in demand could be affected by the high prices of polymers.
• In 2000-01, supply of hdPE, lldPE and PP increased due to the commissioning of Haldia Petrochemicals' cracker and downstream units. Imports declined, while exports increased, due to an increase in domestic availability.
• Prices of polymers increased in first half of 2000-01, in line with the increase in the prices of feedstocks, naphtha, ethylene and propylene. However, in second half of 2000-01, prices of naphtha, ethylene and propylene declined due to increased production of crude oil by OPEC and the release of petroleum products by the US from its Strategic Petroleum Reserves. Hence, prices of polymers declined.
• In 2000-01, margins of most polymer producers are expected to be lower as compared with those in 1999-2000, as the increase in the prices of feedstocks, is expected to be higher as compared with the increase in polymer prices.

Basic petrochemicals and Polymers: Budget impact

Impact factors

Company name	Impact	Impact factors
DCW	Neg	A,B,C
(6.75, 6.90)
Finolex Industries	Neut	A,B
(22.45, 22.95)
IPCL	Neg	A,B,D
(69.00, 71.35)
NOCIL	Neg	A,B,D
(18.40, 17.95)
RIL	Neg	A,B,E
(402.75, 414.10)

Note

Figures in brackets indicate the closing share prices, on February 27, 2001 and February 28, 2001, respectively.

Pos= positive Neg= negative Neut= neutral

Source: CRIS INFACŪ

A: The reduction in the effective customs duty on basic petrochemicals and polymers is expected to have a negative impact, especially on the integrated petrochemical producers. Domestic polymer (and basic petrochemical) prices are expected to decline in line with a decline in the landed costs. However, impact on non-integrated players, such as Finolex Industries, Supreme Petrochemicals Limited and DCW Limited will be marginal due to a reduction in feedstock costs.

B: The reduction of surcharge on corporate tax, from 13 per cent to 2 per cent and the expected decline in interest rates, is expected to have a positive impact on producers.

C: The reduction in the effective customs duty on soda ash, from 44.04 per cent to 24.8 per cent, and caustic soda, from 44.04 per cent to 40.4 per cent is expected to have a negative impact on the margins of DCW Limited.

D: The reduction in the effective customs duty on MEG, from 32.6 per cent to 24.8 per cent is likely to have a negative impact on the margins of IPCL and NOCIL.

E: The reduction in the effective customs duty on fibre intermediates, MEG and PTA, from 32.6 per cent to 24.8 per cent, and PX, from 9.7 per cent to 9.2 per cent, is expected to have a negative impact on the margins of Reliance Industries Limited.

Rediff-CRISIL Budget Impact Analysis
Budget 2001

Disclaimer: CRISIL has taken due care and caution in compiling this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of its web site.

Tell us what you think of this analysis