Indian domestic petrochemicals demand slowed considerably in 2008-09 while exports were hit by the global financial crisis, but the 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 as per a new market research report on companiesandmarkets.com. Indian PP consumption was estimated at 1.8 mln tons in 2008/09, up 3% year-on-year (y-o-y). Its imports amounted to 250,000 tons 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 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 Q3-09 due to the temporary closure of Mitsubishi Chemical India's 480,000 tpa 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 800,000 tpa plant at Haldia site.
Meanwhile, the temporary closure of Haldia Petrochemicals' 520,000 tpa cracker at Haldia had caused a loss of 15,000 tons of PE and 6,000 tons 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$100 bln, according to the government.
In terms of capacities, by Q3-09 India had PP capacity of 2.51 mln tpa as well as 750,000 tpa HDPE, 218,500 tpa LDPE and 1.19 mln tpa of LLDPE. PS capacity was 360,000 tpa and PVC capacity was 1.47 mln 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, the report forecasts that India will have petrochemicals capacities of 7.21 mln tpa of ethylene (up 153% over 2008), 5.52 mln tpa of PE (up 156%), 5.77 mln tpa of PP (up 180%), 920,000 tpa of PS (up 156%) and 1.78 mln tpa of PVC (up 21%).