India Petrochemicals Report Q4 2009

India Petrochemicals Report Q4 2009

Indian domestic petrochemicals demand slowed considerably in 2008/09 while exports were hit by the
global financial crisis, but BMI’s latest India Petrochemicals Report projects domestic petrochemicals
production capacities more than doubling in the next five years with domestic and export markets set to
recover strongly.
Indian PP consumption was estimated at 1.8mn tonne in 2008/09, up 3% year-on-year (y-o-y). Its imports
amounted to 250,000 tonnes and exported a similar amount. Consumption growth is set to rise further in
2009/10 with demand strengthening amid restocking in the packaging sector. In June 2009, RIL achieved
full production at its new 450,000 tonnes per annum (tpa) PP line at Jamnagar, Gujarat, which is supplied
with propylene by its new fluid catalytic cracking (FCC) at the same site. A second PP line was due to
come online in Q309.
PTA supply in India was tight going into Q309 due to the temporary closure of Mitsubishi Chemical
India’s 480,000tpa PTA plant at Haldia, West Bengal in April due to a mechanical fault. By July, it was
still down. It was, however, continuing the process of starting up its new 800,000tpa plant at Haldia site.
Meanwhile, the temporary closure of Haldia Petrochemicals’ 520,000tpa cracker at Haldia had caused a
loss of 15,000 tonnes of PE and 6,000 tonnes of PP, helping to tighten the market in these products. The
company is, nevertheless, pressing ahead with its debottlenecking project at the site, which envisages
raising the cracker’s nameplate ethylene capacity to 670,000 tpa as well as increasing capacity for
intermediates and polymers.
The Indian petrochemical industry faces a number of challenges to sustained growth, putting India at a
competitive disadvantage in competition with China. India’s ethylene capacity is far smaller than China’s
and is unlikely to rise above its Asian rival’s levels over the forecast period. This will make it impossible
for India to develop segments further downstream. Indian chemical sales are projected to reach US$200bn
by 2020, up from US$65bn, according to forecasts by the Indian Chemical Council (ICC). However, the
industry needs further investment to achieve this level, according to some industry executives. At present,
India's three recently approved PCPIRs will generate a total investment of about US$100bn, according to
the government.
In terms of capacities, by Q309 India had PP capacity of 2.51mn tpa as well as 750,000tpa HDPE,
218,500tpa LDPE and 1.19mn tpa of LLDPE. PS capacity was 360,000tpa and PVC capacity was 1.47mn
tpa. BMI expects the beginnings of a firm recovery in the Indian petrochemicals industry in Q409 with
capacity utilisation rates recovering to normal, although much will depend on the performance on key PP
consuming industries, particularly the automotive and packaging industries. Even when bearing in mind
the delays and cancellations, India will host a rapidly expanding petrochemical industry. By 2014, BMI
forecasts that India will have petrochemicals capacities of 7.21mn tpa of ethylene (up 153% over 2008),
5.52mn tpa of PE (up 156%), 5.77mn tpa of PP (up 180%), 920,000tpa of PS (up 156%) and 1.78mn tpa
of PVC (up 21%).

Executive Summary ....5
SWOT Analysis.7
India Petrochemicals Industry SWOT......... 7
India Political SWOT. 8
India Economic SWOT.......... 9
India Business Environment SWOT .......... 10
Global Market Overview.......11
Global Ethylene Capacities 11
Table: World Ethylene Production By Country, 2008 And 2013 (‘000 tonnes capacity) ........ 11
Polypropylene.......... 14
Global Oil Products Market Review......... 17
Table Global Oil Prices, 2003-2013 (US$ per barrel).... 21
Emerging Asia Petrochemicals Overview 22
Table: Asian Ethylene Projects...... 24
India Market Overview .........25
Government Policy .. 25
Table: India’s Petrochemicals Sector – Cracker Capacity ........ 28
Table: India’s Petrochemicals Sector – Polypropylene Capacity .......... 28
Table: India’s Petrochemicals Sector – Polystyrene Capacity ... 28
Table: India’s Petrochemicals Sector – Polyethylene Capacity. 29
Table: India’S Petrochemicals Sector – Polyvinyl Chloride Capacity... 29
Indian Fertiliser Industry.... 30
Industry Trends And Developments .........32
Government Regulation ...... 32
Projects And Expansion Plans....... 33
Planned Petrochemicals Expansion.......... 38
Table: India’s Petrochemicals Sector – Polypropylene Capacity Projects ....... 38
Table: India’s Petrochemicals Sector – Polyethylene Projects.. 39
Table: India’s Petrochemicals Sector – Ethylene Capacity Projects ..... 39
Foreign Ventures ..... 40
Egypt-India Ventures .......... 40
Industry News – Related Industries 41
Mergers And Acquisitions... 42
Financial Results ..... 43
Petrochemicals Business Environment....45
Table: Asia Pacific Petrochemicals Business Environment Ratings ...... 45
Limits Of Potential Returns. 45
Risks To Realisation Of Returns .... 46
Legal Code/Corruption....... 47
Red Tape....... 47
Foreign Direct Investment .. 47
Tax Regime ... 48
Industry Forecast Scenario ..50
Table: India’s Petrochemicals, 2006-2014 .......... 53
Macroeconomic Outlook..... 53
Table: India – Economic Activity, 2006-2013...... 57
Company Profiles......58
Reliance Industries (RIL).... 58
Indian Oil Corporation (IOC)........ 60
Gas Authority of India (GAIL) ....... 62
Country Snapshot: India Demographic Data.......64
Section 1: Population.......... 64
Table: Demographic Indicators, 2005-2030........ 64
Table: Rural/Urban Breakdown, 2005-2030 ....... 65
Section 2: Education And Healthcare....... 65
Table: Education, 2002-2005 ........ 65
Table: Vital Statistics, 2005-2030.. 65
Section 3: Labour Market And Spending Power .. 66
Table: Employment Indicators, 1996-2001.......... 66
Table: Consumer Expenditure, 2000-2012 (US$) 66
Table: Average Annual Manufacturing Wages, 2000-2012 ....... 67
BMI Methodology ......68
How We Generate Our Industry Forecasts .......... 68
Chemicals And Petrochemicals Industry .. 68
Cross Checks 69
Business Environment Ratings....... 70
Table: Petrochemicals Business Environment Indicators And Rationale.......... 70
Weighting...... 71
Table: Weighting Of Indicators ..... 71