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Global Thermoplastics Scenario in 2007-08

Global Thermoplastics Scenario in 2007-08

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Thermoplastics scenario In India in 2007-08

Global Thermoplastics scenario in 2007-08

Consumption of major thermoplastics in 2007-08 was at 183 mln tons globally. Polyethylene, comprising of High-density Polyethylene (HDPE), Linear Low-density Polyethylene (LLDPE) and Low-density Polyethylene (LDPE) constitute about 38% of major thermoplastics usage followed by Polypropylene (PP) 24% and Polyvinyl Chloride (PVC) 19%. Reliance is present in nearly 90% of global thermoplastics categories.

Combined global demand for PE, PP and PVC was estimated at 148 mln tons during 2007, growing at 5.5%. This growth was mainly driven by LLDPE (6.0%), PP (5.8%) and HDPE (5.6%). Developing countries such as China and India have contributed significantly to global demand growth.
PP, HDPE and LLDPE would continue to lead demand growth for polymers in the future. Overall demand growth is expected to be around 5.3%, marginally behind the capacity growth of 5.4% during the same period.
Aggregate consumption of PE, PP and PVC in India crossed 5 mln tons in 2007-08, registering an impressive growth of 15%. This was achieved despite a high price environment with product pricing in some cases on a 15-year high. The demand growth is attributed mainly to demand in packaging, injection molded components (used in the automotive and appliances sectors), pipes used in agriculture and infrastructure development, flexible packaging as well as bulk packaging. Demand is expected to remain firm in the near term.


















Polypropylene business in 2007-08:
In 2007, the global capacity of PP was 49 mln tons and demand was at 44 mln tons. Demand grew at a healthy rate of 5.8%. Operating rate was relatively high at 90%. North-East Asia (NEA), West Europe and North America account for 70% share of the global demand. Markets of the Indian subcontinent, CIS and Baltic States and NEA have grown faster at 13%, 11% and 9% respectively. Prices remained firm throughout the year. With cost push from crude and naphtha, prices are expected to remain firm in the near future but could soften thereafter, depending on quantum and timings of new capacities.
Over 4.4 mln tons of new PP capacity could be added during 2008-09, of which 0.9 mln tons is being commissioned by RPL. Almost 2.85 mln tons of new capacity is coming up in Middle East alone.
Domestic demand for PP witnessed strong growth of 16% during the year. The demand for 2008-09 is expected to be healthy. PP consumption growth is driven by growth in packaging, automotive, durables and industrial applications.
Key end use segments in packaging are bulk packaging for cement, food grains, chemicals packaging. Flexible packaging growth is driven mainly by BOPP for packaging of snack food and garments, while rigid packaging sector growth depends on FMCG products like bottles for shampoo, talcum powder etc.
Automotive sector, both four and two-wheeler segments, consumes PP for bumper, dashboard, front panel, mudguard, mirror housing, battery casing applications. Major applications of PP in durable sector are in washing machines, refrigerators, mixer grinders etc. With the thrust on infrastructure development, booming consumerism and increase in organized retail, growth in polypropylene is expected to continue.
Use of PP in non-woven is emerging as an exciting of area of growth in India . A large number of non-woven lines were commissioned this year.

Polyethylene (PE) business in 2007-08:
Polyethylene continues to be the largest consumed commodity plastic. Global capacity was 78 mln tons and consumption crossed 68 mln tons in 2007, registering a growth of 5.1%. The operating rates were high at 87%. North East Asia and Middle East leads the demand growth, higher than the aggregate demand.
Middle East is adding bulk of the new capacities followed by capacity additions in North East & South East Asia. These capacity additions are driven by cost competitiveness in the Middle East and high demand in North East Asia.
Nearly 47% of new PE capacities over next five years are coming up in the Middle East region primarily driven by the availability of cheap feedstock.


Globally, LLDPE continues to have the highest consumption growth of around 6% on account of growth in the flexible packaging sector. Injection/roto molding and wires & cables are expected to grow more than sector average. Usage pattern is dominated by films which was 75% of LLDPE in 2007 and expected to remain the same in 2012 as well.
PE prices were strong and reached their peak levels in 2007. In the markets of South East Asia, which set the benchmark prices for the Indian domestic market, HDPE prices were firm and registered a 10% increase; LLDPE registered a 12% growth; whereas LDPE registered a 20% growth.
In India, PE demand grew by 17% during 2007-08. Demand was driven by a robust growth in HDPE as well as LLDPE. HDPE growth was led by high growth in HD/HM pipe and injection molding sectors. LLDPE growth has been driven primarily by flexible packaging. In India , demand for PE is expected to remain robust on the basis of growth in agriculture sector, water conservation and organized retailing. Prices may, however, be affected due to large capacity additions/expansion expected in the region.

Poly Vinyl Chloride (PVC) business in 2007-08:
Global PVC demand grew in excess of 5% in 2007 to around 35.3 mln tons. China , with a 10 mln tons demand in 2007 is the single largest market for PVC both in terms of volume and growth rate.
North America accounts for around 23% of global GDP demand. A slowdown in US GDP could have some impact on demand. However, housing slowdown in the US could have limited impact on global PVC demand since growth in building, construction and infrastructural development in the developing world would compensate for this slowdown.
Global PVC capacity is expected to reach 50 mln tons from the current 42 mln tons over the next 5 years. In 2007, 2.3 mln tons of capacity was added. Of this China alone added 2.1 mln tons of new capacity based on Carbide process. PVC capacity in China in 2007 was 12.5 mln tons and is expected to reach 17.5 mln tons in 2012. More than 85% of this incremental 5 mln tons would be carbide based.
PVC consumption in India was 1.4 mln tons in 2007-08, a growth of 12% over the previous year. Pipes and fittings continued to be the major sector accounting for 70% of domestic PVC demand.
PVC is a major product for infrastructure sector. Pipes for transportation of water for irrigation, drinking water, various sewerage applications, profiles for building industry, wire and cable require PVC as raw material. This has resulted in PVC demand mimicking growth of infrastructure sector in a significant way.
With increasing emphasis and higher budgetary outlays on infrastructure and housing, health and hygiene, PVC consumption is expected to grow in the coming years. Due to stagnant domestic capacity and increasing domestic demand, Reliance imported and augmented its supply.
(Source Courtsey : Reliance Industries)

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