India Petrochemicals Report Q4 2011
Includes 3 FREE quarterly updates
The Indian petrochemicals market is set to see full-year growth figures at half the rate of 2010 as a result of the economic slowdown, but the lack of progress in increasing production capacities means that the country will remain reliant on imports for many products over the long term, according to BMI’s latest India Petrochemicals Report.
India represents a market with enormous potential for expansion over the long term. Per capita plastics consumption is just 7kg despite growth in demand of more than 20% per annum over the past two years. However, India’s petrochemicals market is less predictable than China’s with strong growth over a number of years often followed by lower rates of expansion. India's growth slowdown is now well under way. Moreover, weakness is spreading from investment to consumption, which, in pure GDP accounting terms, is much more significant for economic growth. We expect headline activity to remain below par for the next couple of quarters and have revised down our real GDP growth forecast for FY2011/12 (April-March) to 7.6% from 7.8% previously. Economic slowdown threatens to curtail growth with inflation prompting 11 interest-rate hikes in the past 15 months and impacting negatively on industrial activity and household consumption.
Volatility in raw-material prices and lower orders from overseas have affected man-made fibres. Demand for polyester raw materials expanded by around 13% in 2010 but growth in 2011 and 2012 is widely expected to be below this level. Meanwhile, in H111, polyolefins markets underperformed as processors held back purchases and drew on inventories in anticipation of lower prices. While BMI expects a stronger H211, full-year polyolefins demand growth is likely to be around 10%, half the rate seen in 2010. PP is likely to remain strong due to growth in the automotive and PET is set to rise strongly as a result of impressive performance in packaging sectors, while slower growth in construction will keep PVC sales growth at around 6%.
Strong demand for LDPE and LLDPE film attracted imports in 2010, while the country remains selfsufficient in HDPE over the short term due to plentiful capacity and relatively poor demand. Additional capacity coupled with low rates of domestic demand growth will mean poorer import performance in 2011. The situation in 2011 is likely to be short term. Despite the more lacklustre performance in 2011, Reliance Industries Limited (RIL) has projected that India will need capacity of at least one new worldscale cracker every year to satisfy demand for polymers, which is forecast to exceed 20mn tonnes in 2020. While over the short term there is a danger of overcapacity, there is a danger of shortages in intermediates such as styrenics, vinyl acetate monomer, acrylic acid and oxo-alcohols to supply the basic and speciality chemicals manufacturers.
In the Asia Petrochemicals Business Environment Ratings matrix, India remains at joint eighth place with Australia this quarter with its score unchanged at 63.4 points. This puts it 0.2 points behind Malaysia and 15.1 points ahead of Indonesia.
The Indian petrochemicals market is set to see full-year growth figures at half the rate of 2010 as a result of the economic slowdown, but the lack of progress in increasing production capacities means that the country will remain reliant on imports for many products over the long term, according to BMI’s latest India Petrochemicals Report.
India represents a market with enormous potential for expansion over the long term. Per capita plastics consumption is just 7kg despite growth in demand of more than 20% per annum over the past two years. However, India’s petrochemicals market is less predictable than China’s with strong growth over a number of years often followed by lower rates of expansion. India's growth slowdown is now well under way. Moreover, weakness is spreading from investment to consumption, which, in pure GDP accounting terms, is much more significant for economic growth. We expect headline activity to remain below par for the next couple of quarters and have revised down our real GDP growth forecast for FY2011/12 (April-March) to 7.6% from 7.8% previously. Economic slowdown threatens to curtail growth with inflation prompting 11 interest-rate hikes in the past 15 months and impacting negatively on industrial activity and household consumption.
Volatility in raw-material prices and lower orders from overseas have affected man-made fibres. Demand for polyester raw materials expanded by around 13% in 2010 but growth in 2011 and 2012 is widely expected to be below this level. Meanwhile, in H111, polyolefins markets underperformed as processors held back purchases and drew on inventories in anticipation of lower prices. While BMI expects a stronger H211, full-year polyolefins demand growth is likely to be around 10%, half the rate seen in 2010. PP is likely to remain strong due to growth in the automotive and PET is set to rise strongly as a result of impressive performance in packaging sectors, while slower growth in construction will keep PVC sales growth at around 6%.
Strong demand for LDPE and LLDPE film attracted imports in 2010, while the country remains selfsufficient in HDPE over the short term due to plentiful capacity and relatively poor demand. Additional capacity coupled with low rates of domestic demand growth will mean poorer import performance in 2011. The situation in 2011 is likely to be short term. Despite the more lacklustre performance in 2011, Reliance Industries Limited (RIL) has projected that India will need capacity of at least one new worldscale cracker every year to satisfy demand for polymers, which is forecast to exceed 20mn tonnes in 2020. While over the short term there is a danger of overcapacity, there is a danger of shortages in intermediates such as styrenics, vinyl acetate monomer, acrylic acid and oxo-alcohols to supply the basic and speciality chemicals manufacturers.
In the Asia Petrochemicals Business Environment Ratings matrix, India remains at joint eighth place with Australia this quarter with its score unchanged at 63.4 points. This puts it 0.2 points behind Malaysia and 15.1 points ahead of Indonesia.
Contents
Executive SummarySWOT Analysis
India Petrochemicals Industry SWOT
India Political SWOT
India Economic SWOT
India Business Environment SWOT
Global Petrochemicals Overview
Financial Results
Global Oil Products Price Outlook
Table: Oil Product Price Assumptions, 2011 (US$/BBL)
Table: Oil Product Price Forecasts, 2011-2015 (US$/BBL)
Emerging Asia Petrochemicals Overview
India Market Overview
Government Policy
Table: India’s Petrochemicals Sector – Cracker Capacity
Table: India’s Petrochemicals Sector – Polypropylene Capacity
Table: India’s Petrochemicals Sector – Polystyrene Capacity
Table: India’s Petrochemicals Sector – Polyethylene Capacity
Table: India’s Petrochemicals Sector – Polyvinyl Chloride Capacity
Indian Fertiliser Industry
Industry Trends And Developments
Government Policy And Regulation
Projects And Expansion Plans
Planned Petrochemicals Expansion
Table: India’s Petrochemicals Sector – Polypropylene Capacity Projects
Table: India’s Petrochemicals Sector – Polyethylene Projects
Table: India’s Petrochemicals Sector – Ethylene Capacity Projects
Industry News – Related Industries
Mergers And Acquisitions
Financial Results
Business Environment
Petrochemicals Business Environment Ratings
Table: Asia Pacific Petrochemicals Business Environment Ratings
Legal Code/Corruption
Red Tape
Foreign Direct Investment
Tax Regime
Industry Forecast Scenario
Petrochemicals Outlook
Table: India’s Petrochemicals Sector, 2008-2015 (‘000 tpa, unless otherwise stated)
Macroeconomic Forecast
Economic Activity
India – Economic Activity
Company Profiles
Gas Authority Of India (GAIL)
Indian Oil Corporation (IOC)
Reliance Industries (RIL)
Glossary Of Terms
Table: Glossary Of Petrochemicals Terms
BMI Methodology
How We Generate Our Industry Forecasts
Chemicals and Petrochemicals Industry
Cross Checks
Business Environment Ratings
Table: Petrochemicals Business Environment Indicators And Rationale
Weighting
Table: Weighting Of Indicators Skip to top