← External Forces: Trade, Geopolitics & Market Access (all topics)
Import parity pricing
What it is
Domestic polymer and petrochemical prices are set at the landed cost of imports - international price plus freight, insurance and customs duty - rather than by domestic production cost. Producers are price-takers on a global benchmark
Naphtha and crude feedstock spreads determine the margin against that price
Impact on industries
- Realisation is determined offshore, so a domestic producer cannot price above import parity however efficient or well-located it is
- Chinese and West Asian capacity additions have depressed global polymer prices, compressing spreads across the Indian industry
- Downstream integration into compounding, films and specialty grades escapes pure commodity pricing and captures conversion margin
- Refinery integration secures feedstock at transfer cost, and the same import-parity mechanic governs fertilisers and several metals