Polymer Industry in India

Polymers account for around 70% of petrochemicals and that is the reason that they are the most important constituent of theIndian chemical industry.

Polymers are essentially used in the manufacture of various plastic products. In the consumption of the basic petrochemical, polymers form the bulk of demand with a share of around 55%.

The share of polymers in the product mix inIndia for various crackers ranges from 60% to 90%. The segment of polymers have registered a growth of 18% while there have been an increase of 26% in the capacities CAGR.

The various byproducts of polymers are:

• Polystyrene
• PVC
• Poly propylene
• LDPE/ LLDPE
• HDPE

Polystyrene, a byproduct of polymers has a Rs 435 crore market size. Its market price was around Rs 42.5 per kg in 1999. The major companies involved in the production of polystyrene are Rajasthan Polymers, Mc Dowell & Co., and Supreme Petrochem. PVC, a polymers byproduct, is in demand in theIndian market at 554,000 tons per annum.

This segment has been growing at the rate of 15% yearly. Around 54% of PVC is used in the manufacturing of pipes and 14% is used in the production of cable sheathing. The cost of PVC was Rs. 44.95 per kg in 1999. The main companies involved in the production of PVC are IPCL and RIL.

Polypropylene is a very light weight polymer and that is the main reason why it is used as a substitute for various other polymers. During 1997-1998, around 11,000 tons of poly propylene was imported. Over the last 3 years, the demand for this product has increased by 38% and now stands at 595,000 tons. The price of polypropylene was Rs 47.50 per kg in 1999. It is mainly used in the manufacture of injection molding, BOPP, ropes, twines, and In India, low-density polyethylene (LDPE) and linear low density polyethylene (LLDPE) are also widely used polymers. This segment of polymers is growing at the rate of 12% per year. More than 50% of LDPE/ LLDPE is used by the packaging industry and they were priced at around Rs 54.25 per kg in 1999. The companies which make LDPE/ LLDPE are Oswal, RIL, and IPCL. The second most used polymer inIndia is HDPE, with a share of 22%. The value of its domestic consumption is Rs 2, 123 crore and it is growing at the rate of 15% per year. It cost around Rs. 50 per kg in 1999. HDPE is used in the manufacturing of raffia, blow molding, injection molding, and in the paper industry as well. The companies involved in the production of HDPE are NOCIL, RIL, and IPCL.

Polymers form an important constituent of theIndian petrochemical industry. So efforts must be taken by the industry and the government ofIndia, so that the production and quality of polymers remain top class.

Petrochemical Industry

The petrochemical industry in India has been one of the fastest growing industries in the country. Since the beginning, the Indian petrochemical industry has shown an enviable rate of growth. This industry also has immense importance in the growth of economy of the country and the growth and development of manufacturing industry as well. It provides the foundation for manufacturing industries like construction, packaging, pharmaceuticals, agriculture, textiles etc.

The Indian petrochemical industry is a highly concentrated one and is oligopolistic in nature. Even a few days back, only four major companies viz. Reliance Industries Ltd (RIL), Indian Petrochemicals Corporation Ltd. (IPCL), Gas Authority of India Ltd. (GAIL) and Haldia Petrochemicals Ltd. (HPL) used to dominate the industry at a large extent. The recent amalgamation of IPCL with RIL has made the industry more concentrated further, as they jointly account for over 70% of country's total petrochemical capacity. However, the scene is a bit different for the downstream petrochemical sector, which is highly fragmented in nature with over 40 companies exist in the market.

The Characteristics of Indian Petrochemical Industry

Petrochemical Industry in India is a cyclical industry. This industry, not only in India but also across the world, is dominated by volatile feedstock prices and sulky demand. India has one of the lowest per capita consumptions of petrochemical products in the world. For example, the per capita consumption of polyester in India lies at 1.4 kg only comparing to 6.6 kg for China and 3.3 kg for the whole world. Similarly, the per capita consumption of polymers is 4 kg in India, whereas the per capita consumption is around 20 kg for the whole world.

The Growth

The petrochemical industry in India came into existence during 1970s. The 1980s and 1990s saw some rapid growths for Indian petrochemical industry. The biggest reason for this growth was the high demand for petrochemicals in India, which grew at an annual rate of 13 to 14% since late 90s. It also called for rapid expansion of capacity. The BMI forecast of average annual growth in India over 2007-2011 is 14 to 16%. However, the industry suffered setbacks during 2008 due to surge in the price of crude oil. It will be tough for Indian petrochemical industry to plug the deficit of 5mn TPA of ethylene and 4mn TPA of polymer by 2012 (according to the predictions of the government).

The Present Scenario Presently India has three gas-based and three naphtha-based cracker complexes with a combined annual capacity of 2.9 MMT of ethylene. Besides this, there are also 4 aromatic complexes with a capacity of 2.9 MMT of Xylenes.

The production of 5.06 MMT polymers during FY09 accounted for around 62% of the total production of key petrochemicals. It also achieved 88.5% capacity utilization. The industry also produced 2.52 MMT of synthetic fibres during FY09 with a 73% of capacity utilization.

Key Segments

Petrochemical industry is constituted of the following key segments:

• Polymers:
  
  The demand for polymers saw a growth of 13.4% during 2007, comparing to a demand growth of 5.6% in 2006. According to the prediction of Chemicals and Petrochemicals Manufacturers' Association (CPMA), the demand growth for polymer would further be augmented to over 15% in the coming year.
• Polyester Intermediates: The combined production of 5 fibre intermediates (CAN, DMT, Caprolactum, MEG and PTA was 3,417 KT during 2007. Among those, PTA and MEG accounted for 69% and 27% respectively, while the rest were DMT, Caprolactum and CAN.
• Aromatics (Paraxylene): The demand for Paraxylene (PX) saw a growth of 18% during 2007. According to the prediction of CPMA, it is expected to grow at the same rate in the coming year as well.
• Benzene, Toluene, MX and OX: The demands for Toluene and OX saw a contraction rate of 4% and 10% respectively during 2007. However, Benzene and MX saw a positive growth though.

Top Petrochemical Companies in India

Though the Indian petrochemical industry is highly dominated by only a few players, however, there are a number of petrochemical companies in India, doing their share of business. Some of the top companies can be listed as below:

• Reliance Industries Ltd.
• Haldia Petrochemicals Ltd.
• Indian Oil Corporation
• Gas Authority of India Limited
• National Organic Chemical Industry Ltd.
• Bongaigaon Refinery and Petrochemicals Ltd.
• Manali Petrochemical Limited
• I G Petrochemicals Limited
• The Andhra Petrochemicals Limited
• Tamilnadu Petroproducts Limited