The falling trend in the price of Vinyl Acetate Monomer, popularly known as VAM which started in October last year is continuing and the adhesive manufacturers hope that the trend continues in the fourth quarter as well. For example, average VAM price was around US$ 1,325/tonne during the second quarter of this financial year which has now come down below USD 1000/tonne. At the same time Indian rupee has also strengthened vis-à-vis USD which has helped in containing the cost further. VAM is the main raw material used in adhesive production.
Due to continued rise in the price in VAM prices and also rupee depreciation last year, adhesive manufacturers had to effect price hike couple of times. For example, Pidilite, leading adhesive manufacturer in the country, hiked prices of some of its brands in December by 1.5%.
India imports VAM from China, Saudi Arabia and Singapore. Imports from China and Saudi Arabia – which are subject to 7.5% import duty – account for around 37% of India’s total VAM import volume. Remaining 63% of the volume is imported from Singapore.
Apart from high VAM prices, adhesive manufacturers have also badly hit by rubber, solvent and packaging prices which have seen an uptick led by firming up of crude prices.
Pidilite is a dominant player in India’s adhesive market with a market share of 70% in its leading brand categories (Fevicol) in the organised segment.