If the PVC resin consumption during 20-21 is any indication, the production of or demand for plastic pipes has seen a decline in the just concluded financial year. According to rough estimates, PVC resin consumption declined by 15% during the financial year 20-21. PVC resin is the main raw material used in the manufacturing of PVC pipes which are mainly used in the plumbing and irrigation.
Decline in demand was due to multiple reasons. Covid-led lockdown which affected construction activities in the country during last year and that too during the peak busy season had its impact on the demand for PVC pipes as they are mainly used for plumbing purposes in buildings. Though demand from irrigation (agriculture) was healthy it could not make up for the loss of demand on plumbing front. Lockdown was followed by steep increase in the prices of PVC resins which has more than doubled in last one year. Also, resurgence of Covid-19 second wave towards the end of the financial year had its impact on demand in the fourth quarter.
Demand was good during the first two months of the current calendar year thanks to pick up in real estate construction activities. However, resurgence of Covid in the form of second wave again derailed the demand recovery.
According to dealers, demand for pipes from irrigation sector during the fourth quarter of the FY20-21 was subdued, mainly due to prevailing high prices. However, demand from housing sector was good during the quarter.
Demand from irrigation sector has picked up in April though some states have announced lockdown. Also, the experts are of the opinion that PVC resin prices may correct from the current high level of Rs 137/kg. Though it’s unlikely to reach Rs 80-90/kg level, sustaining the current high levels is also unlikely.