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India Petrochemicals Report Q1 2012
Business Monitor International, Dec 2011, Pages: 75
Business Monitor International's India Petrochemicals Report provides industry professionals and strategists, corporate analysts, petrochemical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on India's petrochemicals industry.
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. BMI expects headline activity to remain below par for the next couple of quarters and have revised down its 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. Despite lower imports in 2011, Reliance Industries Limited (RIL) has projected that India will need capacity of at least one new world-scale 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 oxoalcohols to supply the basic and speciality chemicals manufacturers.
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