ICICI Securities: Maintain ‘hold’ on Astral Poly and Supreme Industries

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Published: August 29, 2019 3:20:03 AM

Considering the quantum of amount notified, the ADD would make the Chinese and Korean imports (constituting 30% of India’s overall imports of CPVC resin/ compound) non-competitive vs their major global (particularly US and Japan) peers.

ICICI Securities, commerce and industry, Supreme Industries, Astral Poly, CPVC resin, China, CPVC pipe playersAstral Poly Technik (ASTRA) is poised to be the biggest beneficiary in this regard.

The Union ministry of commerce and industry has finally notified a provisional anti-dumping duty (ADD) on imported CPVC resin/compound from China and Korea for a period of six months from 26th Aug’19 (the date of publication of the notification in the official gazette).

Considering the quantum of amount notified, the ADD would make the Chinese and Korean imports (constituting 30% of India’s overall imports of CPVC resin/ compound) non-competitive vs their major global (particularly US and Japan) peers. This is likely to pave the way for top Indian CPVC pipe players (sourcing resin/compound from US/Japan) to not only take price hikes in the near future, but also increase their market share. Astral Poly Technik (ASTRA) is poised to be the biggest beneficiary in this regard. We maintain our ‘hold’ rating on ASTRA and Supreme Industries.

The Union Ministry of Commerce and Industry vide notification no. 33/2019-Customs (ADD) dated 26th Aug’19, has finally notified a provisional anti-dumping duty on imported CPVC resin/compound from producers/exporters from China and Korea.

The duty shall be effective for a period of six months from the date of its publication in the official gazette. Considering the quantum of amount notified for CPVC resin/compound (from $2,031/te to $2,849/te), the ADD would make the Chinese and Korean imports (constituting 30% of India’s overall imports of CPVC resin/compound) noncompetitive vis-à-vis major US and Japan CPVC suppliers. This is likely to pave the way for top Indian CPVC pipe players (sourcing resin/compound from US/Japan) to not only take sizeable price hikes in near future, but also consolidate market share.

As a fallout of the stated notification, we expect Indian CPVC pipe manufacturers sourcing CPVC resin/compound from China/Korea to take aggressive price hikes and pass on the entire impact of ADD. This would enable the top Indian CPVC pipe players sourcing resin/ compound from US/Japan to take corresponding price hikes.

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