Even on the export front, the war between Ukraine and Russia is having a negative effect amid excessive freight costs. Since the outbreak of the Covid-19 pandemic, raw material suppliers have increased prices by up to 14%.
Plastic manufacturers in Gujarat are in a catch-22 situation as the prices of raw materials, including granules, rise, but their customers are unwilling to pay more. Even on the export front, the war between Ukraine and Russia is having a negative effect amid excessive freight costs. Since the outbreak of the Covid-19 pandemic, raw material suppliers have increased prices by up to 14%. Although prices started to fall due to the continued decline of Covid-19 cases not only in India but around the world, but after Russia’s invasion of Ukraine, commodity prices started to rise again, said Shailesh Patel, immediately former President of Gujarat State Plastic Manufacturers Association (GSPMA).
Since the outbreak of the war between Russia and Ukraine, commodity prices have risen by at least 10%, Patel said, adding that if the situation did not improve in the near future, there would be a further escalation not only in the raw material prices, but in all inputs including fuel and transport costs.
Plastic goods exporters are in complete chaos due to the unavailability of containers and higher freight rates. Some of the Gujarat-based exporters who had taken orders from Canada before the war broke out face a challenge as the freight rate to ship shipments to Canada has risen from $300 to $1,100, he added.
“In this volatile market, suppliers of plastic raw materials are pushing up prices relative to global rates. Plastic manufacturers have no choice but to buy raw materials from them at higher prices, but their buyers are unwilling to pay more because orders are taken well in advance,” he lamented, adding that private sector customers forget that even governments consider no increase in raw material price and adhere to the prices quoted by the supplier during the bidding process.
With more than 10,000 plastic units and an annual turnover of more than Rs 40,000 crore, Gujarat has a share of more than 25% in the Indian plastic industry. More than 70% of the total units are SMEs. The plastics industry in Gujarat provides employment to nearly 15 lakh people.
The suppliers of raw materials to plastic processors are handful. Forget PSUs from private players including Indian Oil Corporation (IOC), GAIL India Limited, Bharat Petroleum Corporation Limited (BPCL). ONGC Petro Additions Limited (OPaL) and others have also increased the prices of plastic raw materials.
This post The cost of raw materials hurts plastic producers in Gujarat was original published at “https://www.financialexpress.com/industry/raw-materials-cost-hurting-plastic-makers-in-gujarat/2464662/”