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Petrochemicals production set to double in India by 2014-15

 
India's petrochemicals industry wills double production capacity by 2014-15 as per a report by Business Monitor International. The sector, which is showing signs of recovery, is expected to benefit from increases in local and overseas demand.
In June, Reliance Industries Limited (RIL) commenced full production of the 450,000 tpa polypropylene (PP) train in Jamnagar, Gujarat. The train receives feedstock from the company's fluidized catalytic cracker unit at the same site. RIL is likely to commission the second PP train in Jamnagar by the end of this year.
In 2008-09, India's polypropylene consumption increased by 3% year over year to 1.8 mln tons, which included imports of about 250,000 tons. The report predicts that inventory stocking and a rise in demand from the packaging sector will further drive the demand for polypropylene. However, the temporary suspension of Haldia Petrochemicals Ltd’s (Kolkata, West Bengal) 520,000 tpa facility is expected to decrease India's output of polypropylene and polyethylene by 6,000 tons and 15,000 tons, respectively. Haldia Petrochemicals is working on increasing the nameplate capacity of its ethylene cracker to 670,000 tpa. This also includes increasing the production capacity of polymers and intermediates.
The report forecasts that in the third quarter of this fiscal year, the ongoing temporary shutdown of the 480,000 tpa facility operated by Mitsubishi Chemical Holdings Corporation (Tokyo, Japan) in Haldia will lead to a decline in the supply of purified terephthalic acid (PTA). In April, mechanical fault maintenance forced Mitsubishi to suspend operations at the facility. The company, which is constructing an 800,000 tpa PTA facility at the same site, is expected to restart operations at the facility soon. Production capacities of low-density polyethylene (LDPE) and high-density polyethylene (HDPE) are forecast to reach 218,500 tpa and 750,000 tpa respectively, in Q3-09. During this period, polypropylene production capacity is expected to increase to 2.51 mln tpa. The report states that the sector is expected to witness growth starting in the fourth quarter of this fiscal year. Industrial Info understands that, if demand from the automotive and packaging sectors increases, the production facilities will begin to operate at full capacity.
The report also predicts a substantial growth in India's petrochemicals production capacity by 2014-15. Polypropylene production capacity is forecast to increase 180% from 2008 production figures, reaching 5.77 mln tpa, while ethylene production is estimated to grow 153% to 7.21 mln tpa. Polyethylene capacity is set to increase 156% to 5.52 mln tpa. Polyvinyl chloride (PVC) and polystyrene production are expected to increase to 1.78 mln tpa and 920,000 tpa, respectively.
Volatility of crude oil prices and erratic global demand have slowed the growth of the domestic petrochemical sector. Industrial Info understands that India has set a growth target of 12% for the ongoing 11th five-year plan period, 2007-2012. According to Secretary for the Department of Chemicals and Petrochemicals, the sector has so far recorded a growth rate of 6.5%.
China is India's biggest rival in this sector. Industry experts have observed that in the short term, India's production capacity of ethylene, which is presently much lower than that of China, is not expected to increase. India also lags behind China in per-capita polymer consumption. India consumes about 5.2 kilograms per capita compared to China's per-capita consumption of 30 kilograms. India's consumption of polymers is about 6.2 mln tons, which is only around 3% of the global consumption of 200 mln tons. Globally, the contribution of petrochemicals to the chemicals sector is about 40%. In India, this sector accounts for only 20% of the chemicals industry.
According to the Indian Chemical Council (Mumbai), India's chemicals and petrochemicals sales are expected to reach US$200 bln by 2020. Currently, India's revenues from this sector are about US$65 bln. Experts have observed that new investments are critical to attain projected revenues. In order to boost investments and growth in the petrochemicals sector, the Indian government has announced a national policy for this industry and the Petroleum, Chemical and Petrochemical Investment Region. These plans aim to increase investment, improve and develop new infrastructure, increase domestic demand, and build research and development centers for this sector.
 
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