Plastic manufacturers are all set to raise their products' prices by two-three per cent this month due to increase in the costs of raw materials and labour following a sharp increase in crude prices.
Being a derivative of crude oil, polymer prices move in tandem with the movement in the prices of brent crude, fluctuations in the rupee against the dollar and cost of labour. All these three factors have supported domestic crude oil refineries to raise their polymer prices intermittently over the last two months, thus, coinciding with the movement in the crude oil prices.
Data compiled by plastemart.com showed that prices of all varieties of polymer have moved up since August this year. While polypropylene has become costlier by 4.6 per cent to trade currently at Rs 103,908 a tonne, from Rs 99,318 a tonne for August, linear low-density polyethylene (LLDPE) prices have moved up by 5.4 per cent to Rs 89,176 a tonne for October, compared to Rs 84,588 a tonne for August.
"We have no option but to raise prices of plastic products in proportion to the increase in polymer prices. While we often pass on the raw material price increase to consumers, we also factor in labour cost, which has gone up consistently. Thus, plastic products are set to become costlier in coming days," said Pradip Thakkar, vice-chairman, Mechemco Industries, a Mumbai-based manufacturer and exporter of plastic products.
Brent crude has become costlier by 15.2 per cent to trade currently at $85.1 a barrel. Coupled with brent crude, the rupee has depreciated by 7.7 per cent since August to close on Wednesday at 74.39 against the dollar, versus 68.66 on August 1.
Following the increase in crude oil prices and rupee depreciation, Reliance Industries has raised polypropylene (PP) prices by Rs 2,000 a tonne. Prices of other varieties of polypropylene have also gone up by Rs 2,500 a tonne this month. Similarly, public sector major Indian Oil Corporation (IOC) has raised its polypropylene prices by Rs 2,000 a tonne.
"Apart from crude oil price increase and rupee depreciation, cost of labour has also gone up significantly over the last few years. While nothing has changed in terms of labour cost during the last two months, engagement of skilled and unskilled labour has become costlier in the last couple of years. Another labour cost increase is on the cards in the next three months. Hence, we would raise our products' prices at least by two-three per cent," said an official with the leading plastic manufacturer.
Meanwhile, India's plastic exports jumped by 17 per cent to $8.85 billion for the financial year 2017-18, compared to $7.56 billion in the previous year. The United States (at 12 per cent) continued to be India's largest plastics importer, followed by China (nine per cent) and the United Arab Emirates (five per cent).