Stocks of plastic companies slip on crude concerns

Stocks of plastic companies slip on crude concerns

Investors have turned cautious on companies making plastic products over concerns that earnings will be adversely affected due to the rising oil prices. Polyethylene, a by-product of crude oil, is an input for manufacturing moulded household and farmland products.

Crude prices have gone up 14% since the beginning of the year and is hovering around $102 per barrel. Any further rise in crude prices will have a negative impact on the profit margins of plastic companies, according to analysts. At the current price levels, companies like Supreme Industries, Chemplast Sanmar and Sintex Industries will be able to pass on the rise in raw material prices to customers, feel analysts.

However, if the prices cross $110 per barrel, these companies may have to book losses, said an analyst. Supreme Industries has fallen 8%, while Sintex Industries has declined 5% over the past week. Chemplast Sanmar has slipped over 6% on the BSE.


(Contributed by Harish Rao & Shailesh Menon)