West Asia crisis sparks sharp polymer price surge

Hyderabad: The escalating West Asia crisis has triggered sharp volatility in the plastics sector, with industry representatives alleging that polymer producers have imposed artificial price hikes that are severely affecting manufacturers, particularly small and medium enterprises.

According to Anil Reddy, Senior Vice President of the All India Plastic Manufacturers Association, prices of key polymer raw materials have surged by nearly 65 per cent within just 11 days, placing an enormous financial burden on manufacturers across the country.

“Across all grades of polymer, including LDPE, LLDPE, PP, HDPE and PVC, prices have gone up by roughly Rs70 per kg. Earlier, depending on the grade, prices were around Rs99–Rs100 per kg, but they have suddenly jumped to nearly Rs170 per kg,” Reddy said.

He argued that the steep increase cannot be justified by global crude price movements or supply disruptions linked to the West Asia conflict.

“The war began around late February or early March, but companies increased prices dramatically between March 1 and March 11. Large producers usually hold crude and feedstock inventories for two to three months, so such an immediate spike is difficult to explain,” he said. Polymer resins are derived from crude oil during the refining process. After crude is processed into fuels such as diesel, petrol and kerosene, further refining yields petrochemical derivatives, including polymers used in manufacturing, he explained.

These polymers serve as raw materials for a wide range of products, polypropylene for furniture, LDPE for packaging materials, and HDPE and PVC for pipes and infrastructure applications, he added.

Reddy alleged that large petrochemical companies may be taking undue advantage of the geopolitical crisis to raise prices prematurely, even before higher crude costs reach the supply chain. “This is totally unethical. Manufacturers are forced either to buy the material at inflated prices or absorb the losses,” he said.

The sudden increase has also created severe working capital pressures, particularly as the spike has come at the end of the financial year.

“When raw material prices increase by 65 per cent, the working capital requirement rises proportionately. Small-scale industries simply cannot manage that level of sudden financial stress,” Reddy explained. Industry associations have already taken up the issue with relevant ministries, but Reddy said no effective intervention has yet been made.

He urged the government to step in and examine the pricing pattern, warning that continued volatility in polymer costs could eventually push up prices for a wide range of consumer goods and packaging materials.