China’s PVC rethink to help India pipe makers

Supply likely to tighten after S-PVC rebate withdrawal

- RAM PRASAD SAHU

Stocks in the plastic pipe segment have been reeling from weak demand, intense competition, rising capacity additions, and soft polyvinyl chloride (PVC) prices.

Listed stocks are down an average of 23 per cent over the past year, with Prince Pipes and Fittings shedding the most at 39 percent.

The sector, however, could see some relief following export-tightening measures by the Chinese government, which is seeking to curb oversupply in PVC capacity and discourage high-volume, low-margin exports.

China’s finance ministry has announced the removal of value-added tax export rebates on suspension-grade PVC (S-PVC), effective April this year. This move is expected to reduce the competitive advantage of low-priced Chinese exports, say analysts led by Dharmesh Shah of JM Financial.