Supreme Petrochem Limited Says Imports Fell After Duty Ended

Supreme Petrochem Limited said polymer imports exceeded the prior-year level in May, June and July after India announced a duty exemption for all polymers in early April. SPC said the exemption was withdrawn in July and August imports fell below the prior-year month, although regular monthly imports continued and ABS imports could still approach the prior-year annual level.

Why did SPC's polymer imports rise from May to July?

SPC said the import increase in May, June and July resulted from the temporary duty exemption for all polymers announced by the Government of India in the first week of April. Management said traders and end users had an incentive to seek cheaper overseas material when it could enter without duty. The company characterised the three-month rise as a spike associated with the exemption.

The May-to-July increase did not represent a new ability for Indian buyers to use imported material, according to management. SPC said imported polymers had long entered India and users had sourced them for years. What changed during those three months was the duty treatment, which temporarily lowered the cost of imported supplies for traders and end users.

The timing also coincided with softer demand from the non-original equipment manufacturer, or non-OEM, market in the first quarter. Management said non-OEM demand was subdued in that quarter while imports were high because of the exemption. In the second quarter, it said both OEM and non-OEM demand had returned, with the two customer categories accounting for an approximately 50-50 business split.

Did imports decline after the duty exemption ended?

Yes. SPC said imports fell back to normal or below-normal levels after the exemption was withdrawn in July, and that August imports were lower than imports in August of the previous year. Management nevertheless said regular monthly imports continued, so the comparison indicated a lower run rate rather than an end to overseas purchases.

Management cited limited overseas availability as another possible reason for the August decline. It said building blocks from the Gulf were in short supply because of war-related disruption and that polymer availability was also affected. The August comparison therefore reflected both the end of the duty advantage and supply constraints, rather than customs policy alone.

SPC did not disclose monthly tonnage for polystyrene or acrylonitrile butadiene styrene, or ABS, imports. An analyst cited Indian annual imports of roughly 80,000 tonnes for polystyrene and 130,000 to 140,000 tonnes for ABS, but those were analyst estimates. Management gave a directional view on the full-year outcome without confirming the cited volumes.

Could ABS imports still match the prior year's total?

Yes. SPC said ABS imports could be almost similar to the previous year's full-year total despite the lower August imports. It said polystyrene imports may be a little lower, but substantial quantities had arrived during May, June and July. Management said that, when the full year is assessed in total, imports could therefore be similar to the earlier annual number.

The outlook differed between the two polymers. Management's view was that ABS imports could be almost unchanged from the prior year, whereas polystyrene imports may be lower. SPC also said ABS demand was growing marginally, which it cited when responding to an analyst's view that new domestic capacity should automatically reduce imports.

Management said a competitor's proposed ABS capacity was still in the pipeline and was not operational, with no start-up date known to SPC. The company therefore did not draw a conclusion on the effect of that project on imports. Its response was that both additional capacity and demand growth need to be considered in assessing the market.

What conditions are affecting polymer imports and spreads?

SPC said raw-material availability and freight rates were making product spreads unstable. Management said rising freight for containerised cargo and liquid bulk cargo had narrowed the difference between styrene monomer costs and the landed price of finished products in India. This mechanism can alter the economics of imports independently of the temporary duty exemption.

For the second quarter, management put the general-purpose polystyrene, or GPPS, spread at about US$200 to US$250, depending on the week, day and month. It put the high-impact polystyrene, or HIPS, spread at US$300 to US$350. The HIPS range was therefore US$100 higher than the lower end of the GPPS range, while freight and raw-material movements remained variable.

SPC also said October demand had been good, potentially because of festivities, but management declined to forecast subsequent quarters. It said geopolitical conditions, raw-material availability and the outcome after US midterm elections made conditions difficult to project. That comment was management's assessment of operating conditions, not earnings guidance.

How could SPC's capacity plans affect market supply?

SPC said its 90,000-tonne compounding facility was scheduled for implementation by the third quarter of FY28. It also said its second ABS line should be ready by the third quarter of FY29. Management expects the broader capacity to be fully utilised in FY29-30, while noting that the compounding plant will also process polymers other than ABS.

The company is pursuing automotive components and electric-mobility applications for two-wheelers in ABS. Management said it had received certain acceptances from the two-wheeler segment but described the activity as being at an initial stage. Once 140,000 tonnes of ABS capacity is in place, it expects the product mix to be led primarily by appliances and automobiles, including batteries.

For polystyrene, management said Indian demand in FY27-28 should be above about 375,000 tonnes and that SPC has roughly 60% market share. It separately estimated India-wide expanded polystyrene, or EPS, demand at 165,000 to 170,000 tonnes in the current year, against SPC's EPS capacity of 145,000 tonnes across two locations. These demand estimates provide context for domestic supply but do not amount to an import forecast.

Conclusion

The import pattern described by SPC points to a temporary policy-driven surge rather than a permanent break from established buying behaviour. Imports rose above the prior year during the May-to-July duty-free period, then August fell below the prior-year month after the withdrawal. Yet the earlier inflows mean ABS imports could still be close to the preceding year's full-year total, while polystyrene imports may be somewhat lower.

Next, the market will be watching whether Gulf supply constraints and freight volatility ease, and whether the better October demand persists beyond the festive period. SPC's disclosed milestones are implementation of its 90,000-tonne compounding facility by the third quarter of FY28 and readiness of its second ABS line by the third quarter of FY29. The commissioning date for a competitor's proposed ABS capacity remains unresolved, according to management.