|
|
 |
|
Viewing report
|
|
|
|
India Petrochemicals Report Q1 2011
Business Monitor International, Dec 2010, Pages: 68
The India Petrochemicals Report provides industry professionals and strategists, corporate analysts, oil and gas associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on India Petrochemicals industry.
The Indian petrochemicals industry will be one of the world’s most dynamic over the next five years, but will still lag behind China and needs to improve technological capabilities to add value to production and meet demands of domestic industry, according to BMI’s latest India Petrochemicals Report.
The Indian petrochemicals industry has seen growth of about 14-15% per annum over 2005-2010 and double-digit growth is likely to stay over the medium term. According to a recent top-level report, the value of Indian chemicals output should grow from US$83bn in 2010 to over US$200bn by 2020, figures that concur with BMI’s projections based on capacity expansions and demand growth of 10-12% per annum over the medium term. Indian producers will be focused on improving quality and technology with a move to higher grade products. This will increase the cost of production as well as the value of output. As such, India will be one of the world’s most dynamic petrochemicals producers, although it will continue to lag behind China and the resource-rich Gulf states. As such, it should out-pace the global market, which is not expected to return to pre-recession levels of growth until 2012 at the earliest. India may even exceed these forecast levels if it improves access to feedstock, enhances technology, strengthens distribution channels and ramps up infrastructure. With average per capita consumption at 10% of the global average, India represents a significant growth opportunity with the automotive, electronics, textile, construction and packaging segments representing the key growth drivers. While we are confident of the country’s long-term growth, 2011 will see some significant downside risks to growth with a likely cooling in economic activity.
First, we believe that industrial activity has already hit a peak in the cyclical recovery. Output growth will continue to moderate as low base effects from the trough of the downturn in H109 and the inventory restocking cycle wear out. Second, global conditions will be less accommodative: eurozone growth concerns, coupled with double-dip slowdowns in the US and China, will inevitably have a deleterious impact on financial and commercial inflows into India. Finally, the government will continue to wind back its extraordinary stimulus. This trend has already begun.
However, despite our more bearish take on key economies for 2011, India, bolstered a large domestic demand market, will remain a clear outperformer with economic growth to remain stable in 2011. The main engine of the economy – domestic demand – will be fuelled by rising private consumption and fixed investment levels, as well as the need to rebuild inventories. This has renewed confidence in the petrochemicals industry. BMI estimates that Indian consumption of plastics will grow from 8mn tonnes in 2009 to 16mn tonnes by 2016 and 25mn tonnes by 2020, with a lower rate of growth than the 15-16% seen in recent years. Nevertheless, this should prompt growth in the industry of 9-10% per annum. Estimates for needed investment to cater for the increase in demand for plastics in 2010-16 has been put at US$10bn.
In 2010, India had combined olefins production capacities of 3.89mn tpa ethylene, 3.67mn tpa propylene and 485,000tpa butadiene. In the polyolefins segment, India has capacities of 1.04mn tpa HDPE, 220,000tpa LDPE, 1.91mn tpa LLDPE, 835,000tpa PET, 3.32mn tpa PP, 620,000tpa PS and 1.53mn tpa PVC. In other segments, it has 14.83mn tpa ammonia and 665,000tpa methanol. Output is set to accelerate over the next five years as capacity is expanded. By 2015, combined olefins capacities are forecast to reach 16.6mn tpa, an increase of over 106% compared with 2010. During the same period, polyolefins capacities are set to rise 45% to 13.71mn tpa. While PVC capacity is set to remain at 1.53mn tpa throughout the period, PE capacities will grow by 80%, due in large part to a trebling of LLDPE capacity, and PP will grow by a similar amount. BMI believes that, in the context of global market patterns, the product mix is favourable to the development of an export-oriented petrochemicals industry. Our forecasts are based on delays of up to a year on currently planned projects.
In the Asia Petrochemicals Business Environment Ratings matrix, India has risen from ninth place to joint 7th place with Malaysia with its score rising 1.7 points on the back of rising petrochemicals capacities and improved country risk scores. This puts India 1.5 points behind Thailand and 0.1 point ahead of Australia.
Product samples
A sample for this product is available. Please Login/Register to download this sample.
|
|
|
|
