Formosa Plastics Corp (FPC, 台塑), the nation’s largest producer of polyvinyl chloride (PVC), forecast that PVC prices in Asia would remain at relatively high levels this quarter thanks to rising demand from India, a company official said earlier this month.
India’s demand this year for building materials is expected to grow significantly, given the country’s strong economic growth, Formosa Plastics chairman and president Jason Lin (林健男) told an earnings conference in Taipei.
The IMF predicted that the Indian economy would grow at a rate of 7.4 percent this year, outpacing China’s projected growth of 6.8 percent, he said, adding that India’s higher expenditure on infrastructure projects is estimated to further stimulate demand for petrochemical products.
PVC prices in India rose above US$1,030 per tonne last week, an increase of US$10 per tonne from the previous week, online petrochemical information Web site Polymerupdate reported.
Formosa Plastics’ optimistic prediction also comes from lower PVC production volume in Asia this quarter, as some of the company’s Asian peers plan to conduct routine maintenance on their plants from February to May, which would lend support to a price hike due to lower supply.
The temporary shutdown for maintenance is to affect nearly 4 percent of Asia’s total PVC production volume, Formosa Plastics said.
The firm is also upbeat about the sales outlook of its two benchmark products, acrylonitrile and methyl methacrylate (MMA), as the global market is expected to remain undersupplied in the near term.
Some Chinese acrylonitrile suppliers have halted production because of higher environmental standards for manufacturing industries implemented by the Chinese government, while MMA manufacturers in South Korea, Japan and Thailand plan to cut production volume for regular maintenance, the company said.
The undersupply of acrylonitrile products is forecast to continue until April, Formosa Plastics said, adding that the problem should cause prices to climb higher.
The company, a major unit of Formosa Plastics Group (台塑集團), posted revenue of NT$19.16 billion (US$65.3 million) for last month, a 29.4 percent year-on-year increase from NT$14.81 billion, which it attributed to continued buying interest in major Asian markets.
The company’s PVC sales volume last month increased by 31,000 tonnes from a year earlier, while sales of polyethylene and polypropylene rose by 17,000 tonnes and 30,000 tonnes respectively.
The Taipei-headquartered company is capable of producing 1.265 million tonnes of PVC resin per year, its Web site said.
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