INDIA BUSINESS WORLD - March 1^st - March 15^th - 2008

RIL HIKES POLYMER PRICES

Reliance Industries (RIL) has increased polymer prices across the board with effect from March 1. Thanks to 5% import duty re-imposed on naphtha, the basic raw material for the petrochemical industry. This is third consecutive price hike in the segment. The company had earlier revised polypropylene (PP) and polyethylene (PE) prices in February by 1.5%. RIL is believed to have reduced exports due to strengthening local demand. Polymers are used in packaging, agriculture, automotive, housing, healthcare, water and gas transportation and consumer durables industry.

A Reliance source said: "We have decided to revise prices for various PP and PE grades. The official price list confirming changes in PP and PE has been made available with distributors." However, he refused to reveal by what percentage these prices were revised.

Company sources said prices of LDPE and LLDPE have been hiked by Rs 2 per kilogram while the price of polyvinyl chloride (PVC) has been increased by Rs 3 per kilogram. RIL official spokesperson declined to comment on the price hike.

Given that the petrochemical segment had a bad third quarter, this development comes at a bad time.

RIL is the world's largest polymer producer with the production capacity of 3.5 million tonnes per annum. The capacity would reach 4.4 million tonnes next year, with expansion plans underway.

RIL is the seventh largest manufacturer of Polypropylene (PP) in the world and markets its PP under Repol brand name, PE under Relene brand name and PVC under Reon brand name.

Finance minister P Chidambaram while re-imposing 5% import duty on naphtha stated: "Thanks to a complex regime of export benefits and duty exemptions, naphtha is exported from refineries and naphtha is imported by polymer manufacturers, leading to price distortions and revenue losses."

RIL's petrochemical sites at Hazira, Vadodara, Gandhar in Gujarat and Nagothane in Maharashtra are integrated with crackers. The Jamnagar site is integrated with the world class refinery, ensuring feedstock security at all the sites.