Indonesia Petrochemicals Report

Indian domestic petrochemicals demand slowed considerably in 2008/09 while exports were hit by the global financial crisis, but BMI's 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.

Indian PP consumption was estimated at 1.8mn tonne in 2008/09, up 3% year-on-year (y-o-y). Its imports amounted to 250,000 tonnes 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 tonnes per annum (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 Q309 due to the temporary closure of Mitsubishi Chemical India's 480,000tpa 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 800,000tpa plant at Haldia site.

Meanwhile, the temporary closure of Haldia Petrochemicals' 520,000tpa cracker at Haldia had caused a loss of 15,000 tonnes of PE and 6,000 tonnes 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$100bn, according to the government.

In terms of capacities, by Q309 India had PP capacity of 2.51mn tpa as well as 750,000tpa HDPE, 218,500tpa LDPE and 1.19mn tpa of LLDPE. PS capacity was 360,000tpa and PVC capacity was 1.47mn 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, BMI forecasts that India will have petrochemicals capacities of 7.21mn tpa of ethylene (up 153% over 2008), 5.52mn tpa of PE (up 156%), 5.77mn tpa of PP (up 180%), 920,000tpa of PS (up 156%) and 1.78mn tpa of PVC (up 21%).