Project Reports

The Indian petrochemical industry is one of the fastest growing sectors of the Indian economy. Petrochemicals were seen as futuristic products the consumption of which was bound to expand. The petrochemical sector has, on an average, grown at a rate of 13% per annum, which is more than double the growth of the gross domestic product (GDP). This high growth is due to the expanding demands for a wide product range covering polymers, elastomers, fibres, resins, fertilizers and surfactants, besides all the intermediates and the building blocks.

The contribution of states in production of major petrochemicals is Gujarat 51%, Maharashtra 8%, Uttar Pradesh 7%, Tamil Nadu 6% and others 28%.

India’s petrochemical is expected to have a strong growth in the medium-term, is to expand its capacity with a billion-figure investment in the country. PE and PP capacity is expected to double by 2013. Polyolefin’s demand rose just 3.8% in the financial year of 2008-2009, compared with 15% a year earlier.

Petrochemicals exports were up 44% in Apr 2008-Feb 2009 at INR123 billion (US$2.7 billion). Reliance Industries expects domestic demand for polyolefin to grow at 24% per year to 2020. Haldia Petrochemicals expects growth of 10% per year to 2015. By 2009-20, the total demand of petrochemicals is expected to reach 11.3 million TPA. This will represent an exponential high pace of 8.5% a year.

The demand for polymers especially thermosets, alloys, blend and composites- should rise to nearly 7 million TPA by the terminal year 2009-10, which is about the level for the total industry now. The main consumer segments of polymers-building and construction, plasticulture, packaging, electronics, transportation, domestic consumer goods-will all require increasingly petrochemicals inputs. The expansion will not be limited to quantum; it will be supported also by technology upgradation.

The current per capita consumption of polymers in India is about 2 kg, which is one of the lowest in the world, even lower than in some of the less developed countries. Apparently, the domestic market for polymers will grow in between 10-15% per annum during the present decade.

Synthetic fibres-polyester, nylon and acrylics have come to play an important part in meeting the clothing needs of the expanding populace. The production of synthetic fibres has been growing speedily. The growth has been particularly high in the case of polyester staple fibre (PSF). It has been fairly high for polyester filament yarn (PFY).

The synthetic elastomers include PBR, SBP and butyl rubber. About half of the demand for rubber emerges from the tyre segment. Caprolactum, linear alkyl benzene (LAB) and phenol constitute nearly 80% of benzene consumption in India, a major building block of petrochemical products. The consumption of benzene had grown at a rate of over 34% during 1990-97 periods. It was 530,000 tonnes in 2003-04 and is expected to touch over 700,000 tonnes in 2009-10. LAB is a major surfactant, a feedstock for synthetic detergents. The current per capita consumption of synthetic detergents is very low. LAB consumption is expected to increase from the current level of 449,000 TPA to over 663,000 TPA by 2009-10.The anticipated expansion in the demand for ethylene, one of the principal intermediate products, shows how the petrochemical industry will expand. The ethylene demand was 3.15 million TPA in 2003-04. This is expected to increase to 5.75 million TPA by the year 2010-11. Although Reliance has a major (53%) share of the market, most of the ethylene produced is used for captive consumption. Hence IPCL with a 35% share is the major supplier of ethylene. The ethylene demand is based on the projected demand of major downstream products in 2010.

The key players of the petrochemical industry in India include Reliance, IPCL, GAIL, and Haldia Petrochemicals with others in the lead.

In the long term, the Indian petrochemicals demand is expected to be driven by the large sales market, rapidly expanding happy spending middle class and strong government investment in infrastructure. The substantial growth in the coming years will be fuelled by ever increasing population, accelerated industrial growth and existing low levels of consumption of the materials.