The PE-1 plant of Reliance is closed for a planned shut down for 15 days starting from March 9 while the Gail plant, which was expected to stabilise by February has been delayed by another three to four months. At present, the only product coming from the Gail cracker is crude ethylene. Naturally, the supply demand situation has eased, both in the domestic as well as Asian market.

Analysts point out that all of this will have only one effect -- firm up the price. The price of polyethylene (PE) has shot up from $450 in January to $500 to $510 per tonne. The polypropylene (PP) prices have also firmed up. Presently, PP prices are ruling at $430 to $480 per tonne. In fact,a few grades of LDPE have gone up to $550 to $570 per tonne compared to $490 to $510 per tonne a month back.

For Indian corporates this is a bonanza. Firstly, the international prices have gone up. Secondly, the import duties, both for trading purpose and for actual users, is expected to go up. For trading purposes, the markup on the price is 71.44 per cent compared to 68.5 per cent before the budget. Likewise for actual user the mark-up over the international price is 78.6 per cent compared to 75.7 per cent before the budget. Thirdly the delay in full commissioning of the four lakh tonne PE plant in GAIL would mean that the demand supply situation in the Indian polymer market would ease out.

The players to benefit would be Reliance and IPCL. Both would see higher earnings till the companies start their operations and build up their inventories. Analysts do not expect this to happen before May and till that time both the Indian polymer giants would benefit through higher earnings.