was a year that started with imminent war looming around the corner
and a year that followed a relatively weak global economy of 2002.
2003 - a year that started with uncertainty, had to finally face the
Iraq war in March 2003. Fortunately the war did not last very long
and its adverse effects on the global economy were minimal. However,
oil and other feedstock prices shot up and have since remained high.
The SARS epidemic, raging through most of Southeast Asia, adversely
affected business sentiment during the first half of 2003, particularly
in this region. The weak economies of USA and Western Europe did not
make the situation any better.
there seems to be a positive change in the global economy in
the last two quarters of 2003. The strong recovery of the US economy
in the third quarter is expected to be followed by good growth in
the last quarter. The European economy, excluding Eastern Europe and
Russia, seems to be stagnant. Recovering well from a dull economic
situation this year, Japan has interestingly recorded a positive growth
of about 3% as compared to 2002. Despite losing out in the first half
of the year due to "SARS", the Asian region is finally expected
to show an approximate growth of 5.7% in 2003. China is expected to
show a very healthy growth of 9%, while India could end up with growth
notched optimistically at almost 7%. The present indication is that
the global economy would grow at 2-2.5% and the Asian region would
definitely grow at 6%. What is very gratifying is that the present
indicators of the global economy seem very positive and do give us
reasons to smile for the first time in the past 2-3 years.
year, overall plastics consumption may not be very spectacular. Most
of the pundits predict an overall growth of not more than 4% over
2002. The subdued economy coupled with high oil and feedstock prices
are the major factors that have negatively impacted the growth of
plastics. Whatever growth is expected at the end of the year, is mainly
due to continued impressive growth of over 15% in China and a somewhat
healthier growth of about 5-6% from the remaining Asian regions. India,
with better economic growth this year, may contribute about 10% growth
of plastics. Japan could contribute about 4% growth. It is expected
that overall growth of plastics might end up at about 3.5-4%. Very
optimistically, it may end up a notch higher, but certainly not beyond
2003, the second largest plastics exhibition in the World held
at Chicago in June 2003, was strongly influenced by the weak business
climate. In fact, it echoed the dull sentiments of the plastics industry,
with attendance at the show down by 30%. More importantly, some of
the major American polymer producers such as Dow and Exxon stayed
away from the show for the first time. Continued lack of decent profitability
over the last few years was possibly the prime reason for their conspicuous
absence. Even a machinery manufacturer like Cincinnati Milacron did
not exhibit any equipment at NPE 2003. In fact, Cincinnati Milacron
has stopped manufacturing activity in USA, preferring to serve the
US market from Germany. China has replaced USA as the major export
destination for German machinery in 2003. China is investing favorably
in several plastic processing sectors such as PVC pipes, window profiles
and films including BOPP and BOPET.
past few years have witnessed an increase in investment in polymer
capacity in the Middle East, mainly due to availability of cheaper
feedstock. In the early nineties, there was a shift towards China
for setting up polymer capacity fuelled by its huge potential for
plastics consumption. Three
mega petrochemical projects initiated by major international players
like BASF, Shell etc are expected to come onstream by 2005. However,
these major players are now inclined to set up newer polymer capacities
in the Middle Eastern region. Basell Polyolefins is already planning
two major PP projects in Saudi Arabia. Borouge set up 450KT PE plants
in Abu Dhabi in 2002 and is planning further investments to enhance
PE capacity to almost 600KT by 2005. In addition to Saudi Arabia and
Kuwait, which have a major share of the polymer capacity in the Middle
Eastern region, Iran and Egypt are now building up some capacities.
and Consolidation continues to play an important role in plastics
businesses all around the World.
- GE has swapped
its specialty plastic additives business and old portfolio of
Borg Warner Acrylic products with Crompton with the business of
Silicones from Crompton. GE has subsequently restructured the
business of ETP along with Silicones and other material products
into a new division called Advanced Materials.
- The business
at chemicals maker Kraton Polymers Group has changed hands once
again. Texas Pacific Group, a U.S. buyout firm, will acquire Kraton
Polymers from private equity rival Ripplewood Holdings LLC.
- Dupont has
divested Clysar specialty PE shrink film. Bemis, the World's largest
film producer now owns it.
The Indian economy witnessed a modest 2002, recording a mere 4.7%
growth in GDP mainly due to poor monsoon and a weak rural economy.
In 2003, GDP is definitely expected to show very good growth, catapulated
by excellent monsoon, contributing to the revival of the rural economy.
It would not be very surprising that almost 7% GDP growth would be
achieved in the financial year ending March 2004.
The manufacturing sector has shown almost 5.7% growth compared to
5.2% in 2002. The service sector is expected to show very good growth.
Most of the companies have recorded an excellent recovery in the first
two quarters of the financial year 2003-2004. The stock market is
very buoyant after May 2003 and has gone up by about 90%. The "feel
good" factor prevails and a very positive feeling is omnipresent
all around the country. The basic industries of steel, aluminum and
other metals, automobile, etc. seem to be faring very well. Even the
technology sector is doing quite well. Good investment in infrastructure
developments by the Government as well as private organizations provides
stimulus to plastics sectors like pipe, wire/cable etc. In fact, wire/cable
industry is poised to show growth of about 6%. Government incentive
to the housing sector coupled with low interest (at almost 7.5%) has
given a good boost to housing and related plastics products. The film
fiber (raffia) sector has seen good fresh investments triggered by
increasing consumption in the food sector and exports of FIBC. Only
FMCG (Fast Moving Consumer Goods) sector appears to be a laggard.
Plastics packaging seems to have a healthier growth. Overall PE film
has shown a positive growth despite some lukewarm response from FMCG
somewhat subdued business environment in 2002, the plastics business
seems to be looking more positive this year due to the mentioned
favourable economic indicators. In fact, both Reliance and IPCL,
the two giant polymer producers have reported almost 15% growth
in their polymer sales between April-September 2003 compared to
the same period last year. But the 12-15% growth seen in the early
nineties has not been observed in the past 2-3 years. Most of the
experts from the polymer industry do not expect an overall growth
during this year of more than 10% over 2002. It is quite possible
that the good economic condition in the last quarter of this financial
year may boost polymer growth by a percent or two.
which was one of the fastest growing polymers in the mid nineties,
seems to have lost its sheen in the last 1-2 years. In 2002, PP
lost some business to HDPE due to higher prices, but has currently
stabilized in price compared to HDPE, arresting the shift. Yet the
consumption of PP is expected to be only around 1150KT.
seems to be having a negative growth or reached maturity.
seems to grow well. In fact, LLDPE has achieved a share of more
than 60-65% of the total LD/LLDPE consumption.
therefore still continues to export sizable quantity of Polyolefins
(much more of PP compared to PE). It was earlier expected that the
exports of Polyolefins in 2003 would be significantly lower compared
to 550KT that was seen in 2001-2002.
Only PVC capacity of 788KT seems to be lower than
the expected consumption of about 850 KT in 2003. It could go up
to 875KT if PVC pipes pick up in the first quarter of 2004.
PS is also being exported due to overcapacity.
most probable scenario on the consumption of the commodity plastics
in India in 2003-2004 is :
no commodity polymer capacity additions or expansions in India were
seen in 2003, capacity additions to PET have been
South Asia Petrochemical
has set up 140KT PET bottle chip plant during 2003 in collaboration
with Zimmer at Haldia.
also likely to commission a new 220KT PET bottle chip plant based
on new NG3 technology from Dupont before the end of this financial
year. This is the first commercial project of this new technology
that claims to be very cost effective.
is no capacity expansion of Polyolefins as low
domestic demand has created a situation of overcapacity. 2005, however
holds promise for the Indian plastics industry with the commissioning
contemplating developing additional 400KT capacity of PP at Jamnagar.
However, the capacity expansion may not be executed before 2005.
GAIL is planning
to increase its cracker capacity from 300KT to about 400KT with
an increase in the PE capacity to the same extent latest by 2005.
Indian Oil is
in negotiation with Haldia Petrochemicals. In all probability Haldia
Petrochemicals may consider expansion only after restructuring.
Indian Oil is
seriously considering a petrochemical project at Vadodara in Gujarat.
projects on PVC by different players such as Finolex
Industries, Chemplast and DCW are being actively considered.
finally has started some construction activity and would possibly
set up 130KT additional capacity by 2005.
IPCL also proposes
to enhance its 205KT PVC capacity to almost 350KT. This expansion
may take place in 2004-2005 in a phased manner.
as well as ABS expect to see capacity expansions.
is planning to increase its 205KT Polystyrene capacity by additional
90KT of conventional Polystyrene and 40KT of Expandable PS. These
new projects may be commissioned during next year.
has acquired Crompton Greaves' ABS plant that was closed down for
about 2 years. Bhansali Engineering would therefore have a capacity
of about 30KT of ABS. It has planned to increase capacity to 40KT
at the end of the financial year in March 2004.
Bayer ABS has
present capacity of about 40KT of ABS. It also plans to increase
the capacity of ABS to 60KT in a phased manner over the next two
processing industry has seen significant investments during 2003
in several sectors. Eastern India has done remarkably well in developing
newer plastics processing capacity mainly due to availability of
PE and PP material from Haldia Petrochemicals. Though this region
of India has until now been slow in development of processing capacity,
the past two years have definitely seen setting up of some decent
processing capacity, particularly in the area of raffia, film and
- PVC pipe
sector has added almost 90 new machines during 2003. PP raffia
sector has seen newer investments to participate in the growing
business. The availability of higher productivity with power efficient
plants for PVC pipe as well as raffia from Kolsite and Indian
equipment suppliers has provided stimulus to both these growing
Industries, the largest processor with overall plastics consumption
of more than 90KT/year has divested its 2.5KT BOPP capacity to
Xpro group. The Supreme group is planning to set up India's first
Biaxially Oriented Polystyrene film/sheet (BOPS) plant with the
capacity of 15KT/year, likely to be commissioned by 2004.
- Jindal Polyester
has entered the BOPP film business with 15 KT Bruckner plant,
planning to add 32KT BOPP capacity by next year. The company also
has ambitious plans to increase the BOPP capacity by an additional
32KT by 2005. During this year, Jindal Polyester has acquired
Rexor, the French Polyester film converting company. Jindal plans
to further augment its Polyester film capacity by additional 40KT.
This expansion could be implemented by 2004.
- Flex Industries
has added one more BOPP film line.
- Cosmo, the
largest BOPP film producer with 46KT capacity may achieve 60KT
film capacity before the end of this financial year.
The PE film
industry has seen some additional investments particularly in the
area of Three layer film plants. Some new investments in PP cast
film/sheet have been made this year. Rajoo Engineering has developed
co-extrusion film plant using the downward bubble technology, though
predominantly designed for PP, can also be used for LLDPE.
The capacity of PE foam sheet is in the process of significant expansion.
Essen Multipack alone plans to increase its capacity by about 5
KT in the near future. The predominantly export oriented PVC foam
board business, appears to be growing quite well. This segment expects
to see some new capacity developments next year. The injection moulding
sector for automobile application has been doing quite well. In
fact, thermoplastic compounding sector, particularly in the area
of PP as well as Polyamide is building up additional capacity to
meet the increasing growth of the automotive industry.
Plastics Ltd., India's leading moulder for furniture and material
handling, with processing capacity of over 35KT/year has consolidated
its furniture business and set up a huge new plant in Eastern
India (Barjora, West Bengal). This will augment its capacity by
over 8-10 KT in the near future. Alcoa, the World's largest producer
of compression moulded PP caps has set up a joint venture with
Nilkamal Plastics Ltd. to manufacture PP caps in southern Nepal
on the Indian border. This joint venture called Alcoa CSI (Nepal)
Pvt. Ltd. with an investment of about US$1 million has commenced
production from August 2003. This plant will supply compression
moulded PP caps to the Indian subcontinent.
- Moser Baer,
the leading manufacturer of CD, DVD etc has been aggressively
expanding its capacity from 1 billion pieces to 1.8 billion, significantly
increasing demand for Polycarbonate. This would also increase
Polystyrene consumption for jewel boxes.
- PET bottle
market was adversely affected for about 3-4 months due to detection
of pesticides and insecticides in some carbonated drinks, dampening
the growth of PET bottles. The growth of PET bottles is expected
to be only about 8-10% compared to 15%, generally observed in
the past few years. PET bottle demand could reach between 70KT
- BOPET film,
however, is growing quite well in the domestic market as well
as for exports. It is expected that BOPET film demand would reach
almost 125-130KT out of which more than 50KT would be exported.
of plastics for the financial year 2003-2004 could reach a level
of US$1.1 billion from the level of US$ 0.94 billion. Polymer export
would consist of almost 33% out of the total export. BOPET, BOPP
films, multi-layer films, woven sacks/fabric as well FIBC and injection
moulded auto and electronic components are the major plastics processed
goods that are exported.
is most heartening is that the Indian business and economic scenario
looks very buoyant in the last 6 months and is poised to scale greater
heights in 2004. The plastics industry would also get its share of
glory and could grow by 15% next year. The U.S. recovery is strong,
China is booming, Japan is starting to grow and Europe is turning
around - for the first time in a long time, we're experiencing synchronized
In this euphoric mood we like to take your leave to celebrate the
arrival of the dawn of 2004. We are sure that all of you - our patrons,
members and readers must be basking in the joyous mood. All the members
of our team at www.plastemart.com
would like to wish you and your family " A VERY PROSPEROUS
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