Indian Petrochemical Industry

launch of Smart Cities and emphasis on Rural Development, expected to

have a huge demand push for overall petrochemicals sector.

In addition to these positives, one cannot undermine the impact of soft oil
prices in 2016 either. These are expected to keep the product prices low
and thereby likely to bolster demand for petrochemicals besides placing a
considerable sum of disposable income in the hands of end-consumers and
create increased spending power for them.

Last but not the least, the likely highly anticipated roll-out of Goods and
Services Tax (GST) roll-out in 2016 in future would have a very positive
impact on the way business is conducted.

The opportunities are huge, and the petrochemical industry stands to benefit
in a big way. -ups will
also go a long way in encouraging domestic manufacturing.

A number of Indian state-owned energy companies are making major

investments to boost their petrochemical activities and are expected to
become significant players in the sector. Capacity expansions by several
other manufacturers are moving ahead and gradually filling the gap between
domestic demand and supply.

Overall, the outlook for the petrochemical industry in India is somewhat

more positive than it has been recently, as growth in GDP and industrial
output is expected to be higher in 2016-17 than in the prior year, and key
end-use industries like automotive, packaging, and consumer durables
reflect this outlook.

The Indian domestic polymer industry (like global industry) is dominated by

representing about 73% of all commodity resins
consumed in 2015-16. After clocking a subdued growth in 2013-14 the
polymer growth in India was higher at 7% in 2014-15. Domestic demand is
expected to outpace domestic production.
Table 4: Polymer Demand Supply

Polymers (KT) 2013-14 A 2014-15 A 2015-16 E 2016-17 E

Capacity 9049 9084 9558 12017
Production 8161 7907 9181 10847
Op Rate (%) 90% 87% 96% 90%
Import 2673 3330 3611 3555
Exports 1061 797 887 1536
Net Trade -1612 -2533 -2723 -2019
Demand 9356 10004 11378 12621
Demand Growth % 1.3% 6.9% 13.7% 10.9%

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Polymer import dependency remained high at 33% in 2014-15 and is

expected to come down in next two years to ~27%. PP exports was around
720 KT in 2014-15. PE imports in 2014-15 stood at 1499 KT and PVC
imports were at 1172 KT in the same period. In 2014-15 net trade deficit of
total polymers stood at 2533 KT which was higher than previous year which
stood at 1612 KT. However, trade deficit is expected to rise to 2723 KT in
2015-16 and decline to 2019 KT in 2016-17.

However, the demand for polymers is expected to grow at ~7% in 2015-16

and see a double digit growth of ~13% in 2016-17.
industry, like the overall economy, faces near-term challenges, but the long-
term growth outlook for the industry remains positive. Capacity expansions
by several other manufacturers are moving ahead.

Polyolefins

All PE registered a demand growth of 7% in 2014-15. It is expected that PE

will see a double digit growth in demand to ~13% in 2015-16 and again
bounce back to clock a double digit growth of ~11.3% in 2016-17. PP
registered a demand growth of 8% in 2014-15 and it is expected to witness
a robust growth to touch 18% in 2015-16. Polyolefins registered demand
growth of 7% in 2014-15. It is expected to improve to 16% in 2015-16 and
dip a bit to around 12% in 2016-17.
Table 5: Polyolefin Demand in India Actual & Projected

(KT) Actual Projected % Change year on year

2013-14 2014-15 2015-16 2016-17 2014-15 2015-16 2016-17
LDPE+EVA 575 658 737 809 14% 12% 10%
LLDPE 1236 1328 1546 1781 7% 16% 15%
HDPE 1766 1828 2029 2200 4% 11% 8%
PP 3253 3509 4148 4651 8% 18% 12%
Total PO 6831 7323 8459 9441 7% 16% 12%
Source: Industry Estimates. A: Actual, E: Estimate

India's ONGC Petro-Additions Ltd. (Opal) expects to start commercial

output from its new polyethylene plants in the Dahej Special Economic Zone
in Gujarat in 2016. Opal is building two 360,000 mt/year high density
polyethylene/linear low density polyethylene swing units, and standalone
HDPE and polypropylene units each with 340,000 mt/year capacity,
downstream of the cracker.

The HDPE polymer grades will include injection, pipe, blow moulding, film
and raffia/mono filament, and the LLDPE grades will be film, roto moulding,
lamination and injection moulding.

Mangalore Refinery and Petrochemicals Ltd (MRPL), a subsidiary of Oil and

Natural Gas Corporation Ltd (ONGC), began commercial production of
polypropylene from its new unit as a part of its phase III expansion plan. The

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plant has capacity to produce 440,000 tonne per annum (TPA) of

polypropylene.

Meanwhile in Assam State, in the far north-east of the country, Brahmaputra

Cracker and Polymer Ltd. (BCPL), 70%.owned by Gail, commissioned a
complex in November 2015 based around a 220,000- m.t./year ethylene
and 60,000-m.t.lyear pro-pylene plant. The complex will also produce
226,000 m.t./year of LLDPE-HDPE and 60,000 m.t./year of PP.

Indian Oil Corporation Ltd commissioned its 15 million tons per annum
(mtpa) refinery at Paradip in Odisha. The PP project at Paradip will be
designed co-produce 700,000 m.t./year. The plant, slated to be on-stream
by 2017, will more than double Indian Oil's PP capacity. The company
currently has 650,000 m.t./year of PP capacity at Panipat, Haryana State.

Gail is also doubling ethylene capacity at the company's gas-based

petrochemicals complex at Para, Uttar Pradesh State, to 900,000 m.t./year
and adding 450,000 m.t./year of LLDPE- HDPE, which will double its
capacity for PE.

Meanwhile, HPCL and GAIL have carried out a prefeasibility cum

configuration study for 15 million tons integrated refinery cum petrochemical
complex and also a standalone petrochemical complex and shortlisted three
sites in Andhra Pradesh.

Viny : PVC

The demand for PVC increased substantially 2014-15 from a subdued

growth in 2013-14, however it is expected to gain and clock double digit
growth of around 10% in 2015-16 and sustain to around 9% in 2016-17.
Table 6: PVC Demand Supply

PVC (KT) 2013-14 A 2014-15 A 2015-16 E 2016-17 E

Capacity 1402 1402 1482 1482

Production 1293 1255.8 1354 1406
Imports 1026 1172 1326 1524
Exports 0 0 0 0
Apparent Demand 2309 2443 2678 2931
Demand
Growth%
2.0% 5.8% 9.6% 9.4%

As the economy is expected to perform well with the easing of monetary

policy and various PVC end use sectors performance improving, PVC
demand is expected to see a sustained growth in coming years. While 2013-
14 witnessed capacity addition of cPVC by DCW Ltd. Reliance Industries
too is expected to increase its capacity by debottlenecking at its PVC
complex at Dahej and touch a total of 750 KT capacity by 2015-16.
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Total PVC capacity in India in 2014-15 was 1402 KT by adding Chemplast

(emulsion grade) and DCW cPVC capacity of 30 KT and 12 KT respectively
to 1360 KT which is produced by RIL, Finolex, Chemplast (suspension
grade), DCW (suspension grade) and Shriram (suspension grade) which is
expected to touch 1482 KT by 2015-16 with RIL adding another 80 KT
capacity. Meanwhile, PVC imports are expected to increase further to 1352
KT by 2015-16 from 1048 in 2012-13 and touch 1407 KT in 2016-17.

Styrenics

A. Polystyrene

After witnessing a negative demand growth in 2013-14, demand for PS

increased by ~7% in 2014-15 to touch 232 KT, as shown in table below.
Demand for PS is however expected to witness a slowdown to around 4%
and 3.3% in 2015-16 and 2016-17 respectively. Total Polystyrene capacity
in India is expected to increase and reach 490 KTA by 2016-17 with LG
polymers planning to expand capacity in 2015-16 and 2016-17. Other major
producers of polystyrene in India include Supreme Petrochem and
Styrolution India.
Table 7: Polystyrene Demand Supply

Polystyrene (KT) 2013-14 A 2014-15 A 2015-16 E 2016-17 E

Capacity 472 472 476 490

Production 260 270 280 290
Imports 17 13 14 14
Exports 60 42 44 46
Apparent Demand 217 232 241 249
Demand Growth% -13.3% 7.0% 3.9% 3.3%

B. Acrylonitrile-Butadiene-Styrene (ABS)

ABS, the third-largest styrene derivative, is the largest-volume engineering

thermoplastic resin in the world. ABS is used in many consumer-related
end-use applications including appliances, electronics/electrical, building
and construction, and transportation.

ABS demand in India is expected to grow strongly at 10%, owing to the

growth in the Indian middle class expenditure in home appliances and
automobiles, which will drive the core demand for ABS.

The appliance sector will continue to be the largest ABS end-use market.
Demand for ABS registered a healthy growth of 10% in 2014-15 and
expected to continue to grow at the same rate in 2015-16 and 2016-17.

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Industry capacity is expected rise in 2015-16 and touch 190 KT as

Styrolution ABS Ltd and Bhansali Engineering Polymers Ltd. are expected
to add capacity in that period and touch 190 KT by .
Table 8: ABS Demand Supply

ABS (KT) 2013-14 A 2014-15 A 2015-16 E 2016-17 E

Capacity 131 155 190 190

Production 99 102 112 124
Imports 55 64 71 76
Exports 3 0 0 0
Apparent Demand 151 166 183 200
Demand Growth% 10.2% 9.9% 10.2% 9.3%

C. Styrene-Acrylonitrile (SAN)
Table 9: SAN Demand Supply

SAN (KT) 2013-14 A 2014-15 A 2015-16 E 2016-17 E

Capacity 130 130 150 150

Production 82 87 94 102
Imports 7 7 8 8
Exports 0 0 0 0
Apparent Demand 89 94 102 111
Demand Growth% 6.9% 5.6% 8.5% 8.8%

Demand for SAN declined a percent to 6% in 2014-15 from 7% in 2013-14.

However, it is expected to grow at about ~9% in 2015-16 with capacity
addition touching 150 KT in 2015-16 and demand expected to maintain the
same growth going forward in 2016-17. Imports are expected to touch 8 KT
in coming years to meet the domestic consumption demand.

Olefins (including Butadiene, Styrene, EDC & VCM)

A. Ethylene & Propylene

Ethylene Capacity is further going to increase from 3615 KT in 2014-15 to
5757 KT by 2015-16 and 7127 KT by 2016-17. In 2014-15, production of
ethylene and propylene was 3756 KT and 4020 KT respectively as shown
in table below. Ethylene Production declined in 2014-15 with respect to slow
down in production at Haldia plant. The capacity is however expected to
touch 7127 KT in 2016-17 with the new capacity lined up by RIL, GAIL BCPL
and OPAL and resumed production at Haldia Plant.

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Table 10: Ethylene & Propylene net availability

Ethylene (KT) 2013-14 A 2014-15 A 2015-16 E 2016-17 E

Capacity 3907 3615 5757 7127
Production 3735 3756 5500 6955
Imports 49 60 25 25
Exports 0 0 0 0
Net Availability 3784 3816 5525 6980
Propylene (KT) 2013-14 A 2014-15 A 2015-16 E 2016-17 E
Capacity 4371 4230 5126 5166
Production 4150 4020 4650 4690
Imports 0 0 0 0
Exports 0 10 10 10
Net Availability 4150 4020 4650 4690

Reliance Industries is constructing a 1.4-million m.t./year ethylene plant,

expected on-stream in 2015-16 which will crack refinery off-gases. Reliance
will also adapt its 860,000-m.t./year ethylene plant at Hazira, originally
designed to work on naphtha, to partly use gas. Technip is currently
performing engineering work for the project. The new Jamnagar cracker will
raise Reliance's HOPE total ethylene capacity to 3.2 million m.t./year.
Separately, ONGC Petro additions Ltd. (OPaL), a JV among ONGC, Gail,
and Gujarat State Petroleum Corp., is building a grassroots petrochemical
plant will be a dual-
feed cracker with capacity for 1.1 million m.t./year of ethylene.

Propylene capacity as mentioned in the table above had witnessed a dip in

2014-15 owing to slow down at Haldia plant to 4230 KT from 4371 KT in
2013-14. It is however expected to increase to 5126 KT in 2015-16 with
capacity additions lined up by RIL, HMEL, OPAL and BCPL Assam;
resumed production at Haldia plant. Production in 2015-16 is also expected
to touch 4650 KT from 4020 KT in 2014-15. Bharat Petroleum Corp. Ltd.'s
(BPCL) board earlier in 2014 approved a program to invest an estimated
45.9 billion to produce niche
refinery, in the southern state of Kerala. The company is expanding the
refinery and building a fluid catalytic cracker that will produce 500,000
m.t./year of propylene. BPCL plans to use the propylene to produce acrylic
acid, superabsorbent polymers (SAP), acrylates, and oxo alcohols. BPCL
would be the first company to produce SAP in India. The complex is
expected on-stream in fiscal 2018-19.

B. Butadiene
Sharp decline in crude prices and continued soft demand for synthetic
rubber, coupled with new capacities led to Butadiene prices under pressure
in FY16 before witnessing a steep climb because of turnarounds.

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The demand for butadiene had registered a positive growth of 7% in 2013-

14 and registered a robust growth of 43.4% in 2014-15 and is expected to
maintain around 40% growth in 2015-16 and improve further to around 60%
in 2016-17 on the back of new SBR and PBR plants of RIL coming up.

IOCL added 140 KT of Butadiene capacity in 2014-15 and OPAL is

expected to add 58 KT in 2016-17. Production is expected to increase in
line with the new capacity addition taking place and is expected to increase
from 229 KT in 2014-15 to 482 KT by 2016-17.
Table 11: Butadiene Demand Supply

Butadiene (KT) 2013-14 A 2014-15 A 2015-16 E 2016-17 E

Capacity 295 435 435 493
Production 226 229 318 482
Imports 0 0 6 6
Exports 108 46 79 96
Apparent Demand 120 172 241 386
Demand Growth% 6.3% 43.4% 40.1% 60.2%

There was an exportable surplus of 108 KT in 2013-14, which declined to

46 KT in 2014-15 and expected to rebound in 2015-16 to 79 KT and 96 KT
by 2016-17. There are few imports expected going forward in next fiscal.

C. Styrene

India does not have any capacity for styrene and is fully dependent upon
imports as shown in table below. For 2014-15 imports for
Styrene was 617 KT and growth in styrene was at ~8%. In 2015-16, imports
for Styrene are projected to increase by ~5% and expected to reach 647 KT
and further to 675 KT in 2016-17.
Table 12: Styrene Demand Supply

Styrene (KT) 2013-14 A 2014-15 A 2015-16 E 2016-17 E

Imports 572 617 647 675

Exports 1 1 1 1
Apparent
572 617 647 675
Demand
Demand
Growth%
3.8% 7.9% 4.9% 4.3%

D. EDC & VCM

Almost the entire production of EDC and VCM in India are consumed
captively by the polymer manufacturers for production of PVC and hence,
PVC manufacturers who do not have facilities for captive production of EDC
and VCM have to rely entirely on imports to meet their demand for PVC
building blocks viz. EDC and VCM.

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Table 13: EDC & VCM Import into India

EDC (KT) 2013-14 A 2014-15 A 2015-16 E 2016-17 E

Capacity 190 190 190 190
Production 180 180 180 180
Imports 472 466 495 519
Exports 0 0 0 0
Apparent Demand 652 646 675 699
Growth (%) 2.2% -0.9% 4.5% 3.6%
VCM (KT) 2013-14 A 2014-15 A 2015-16 E 2016-17 E
Capacity 906 906 981 981
Production 880 865 935 951
Imports 412 375 398 450
Exports 0 0 0 0
Apparent Demand 1318 1281 1379 1431
Growth (%) 3.0% -2.8% 7.7% 3.8%

While EDC registered nominal growth of 2.2% in 2013-14 it witnessed a

negative growth of 0.2% in 2014-15. VCM too witnessed a negative growth
of 2.8% in 2014-15. However, EDC is expected to register a positive growth
of ~5% in 2015-16 and remain around that level in 2016-17. In case of EDC
imports, there is once again a surge expected going forward in 2015-16 to
495 KT and 519 KT in 2016-17 from present imports of 466 KT in 2014-15.
Imports in case of VCM is expected to increase from 375 in 2014-15 to 398
KT in 2015-16 and further increase to 450 KT in 2016-17.

Fibre Intermediates

In 2014-15, the combined production of fibre intermediates viz. ACN,

Caprolactam, PTA and MEG reached 4677 KT of which PTA and MEG
constituted 69% and 27% respectively with ACN and Caprolactam together
accounting for the remaining 3%.
Table 14 : Fibre Intermediate Demand Supply

ACN 2013-14 A 2014-15 A 2015-16 E 2016-17 E

Capacity 40 40 40 40
Production 37 34 2 0
Imports 110 118 149 156
Exports 0 0 0 0
Demand 147 152 151 157
Demand Growth (%) 27.7% 3.4% -0.7% 4.0%
Caprolactam
Capacity 70 70 70 70
Production 85 87 87 87
Imports 11 13 15 17
Exports 0 0 0 0

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Demand 96 101 102 104

Demand Growth (%) 2.9% 5.4% 1.0% 2.0%
PTA
Capacity 3930 3930 5652 6434
Production 3420 3596 4552 5628
Imports 978 1045 691 115
Exports 0 0 145 300
Demand 4398 4641 5098 5443
Demand Growth (%) 7.1% 5.5% 9.8% 6.8%
MEG
Capacity 1200 1200 1200 1200
Production 1040 960 1095 1140
Imports 864 982 963 1060
Exports 64 69 70 75
Demand 1840 1882 2013 2125
Demand Growth (%) 11.9% 2.3% 7.0% 5.6%

PTA and MEG constituted 52% and 48% of the total 1963 KT fibre
intermediates imported in 2013-14. Fibre intermediates exported from India
in 2014-15 was 69 KT and is expected to jump to 215 KT in 2015-16 with
the addition of new PTA capacity from RIL. ACN had witnessed a robust
growth of 27.7% in 2013-14 on the back of pesticide industry doing well
however the demand was subdued in 2014-15 and grew at around 4%. PTA
import volumes into India (which is another big and growing polyester
market in Asia) are also expected to decline after the new plant by Reliance
Industries runs at full capacity and touch 115 KT by 2015-16.

IOCL, meanwhile, is taking up detailed feasibility study for 325 ktpa glycol
project estimated to cost Rs 3,150 crore. The detailed feasibility report is
expected by April 2016. This plant is targeted for commissioning by
November 2019.

Two more projects have been planned for the petrochemical complex --
1,200 ktpa PTA plant and petcoke gasification-based synthetic ethanol
plant. Both projects are due to be commissioned by September 2021.

Caprolactam, which is used to manufacture automobile tyre cord, should

benefit from an increase in discretionary spend, once the global economy
returns to the growth path. To manufacture one tonne of caprolactam, about
a tonne of benzene is required. In 2014-15 demand for caprolactam grew
at ~5% and is expected to slow down in coming years to around 1-2%.

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PET (Polyethylene Terephthalate)

Indian PET resin market is highly consolidated and dominated by three
major players, Reliance Industries Limited (RIL), Dhunseri Petrochem
Limited (DPTL) and JBF Industries Limited. In FY15-16, M/s Indorama
Ventures Limited acquired Micro PET 210 KTA & DPTL. Reliance Industries
ET resin market and is expected to
maintain its leadership position through 2016-17.

In 2015-16, Reliance Industries Limited commissioned a new PET resin

facility at Dahej, Gujarat. The plant consists of two lines with a combined
manufacturing capacity of 648 KTA, based on Chemtex technology for
Continuous Polymerization and Buhler Technology for Solid State
Polymerization.

This is one of the largest bottle grade PET resin capacity at a single location
leading PET resin
producer with a global capacity of 1.15 MMTPA. New capacity addition by
Reliance will greatly help the downstream bottle and packaging industry in
meeting the increasing demand from India and the region
Table 15: PET Demand Supply

PET (KT) 2013-14 A 2014-15 A 2015-16 E 2016-17 E

Capacity 950 1140 1765 1815
Production 878 880 1280 1450
Imports 100 150 86 60
Exports 280 330 595 660
Apparent Demand 660 700 770 850
Demand Growth% 10% 6% 10% 10%

In 2014-15, the overall growth for PET industry in India was constrained by
high volatility of prices and reduced liquidity with customers. Due to the
above mentioned reason and concerns from pharma and liquor companies
for use of PET the demand was subdued at 6% in 2014-15.

However in next two fiscals with new capacity addition and growing demand

India, etc to encourage domestics manufacturing the demand is expected

ET capacity is expected to touch 1815 KT
by 2016-17 from 1140 KT in 2014-15 and this will significantly reduce the
imports and boost exports going forward by 2016-17.

Synthetic Fibres
In 2014-15, the combined production of synthetic fibre (PSF, ASF, PPSF,
PFY, PPFY, VFY, VFS and NFY) reached 4310 KT against demand of 3958
KT. The demand growth was at 7.2% in 2013-14. It is expected that the fibre
demand growth would be around 3-5% in next two years. The capacity in
the 2015-16 and 2016-17 is expected to increase to 6710 KT and 6842 KT
respectively from 6660 KT in 2014-15.
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RIL successfully stabilized the production at its new Polyester Filament Yarn
(PFY) facility at Silvassa, which had started production towards the end of
the last financial year. This expan
fibre and yarn.
The new PFY plant at Silvassa is the most automated and one of the most
environment-friendly plants globally.
Table 16: Demand Supply Balance of Synthetic Fibre

2013-14 A 2014-15 A 2015-16 E 2016-17 E

PSF
Capacity 1150 1260 1260 1260
Production 936 971 958 962
Imports 28 43 51 30
Exports 168 205 118 130
Demand 812 835 876 907

Demand Growth (%) 4.3% 2.8% 4.9% 3.5%

ASF
Capacity 166 158 98 98
Production 73.6 96.11 95.37 95.37
Imports 29 32 34 34
Exports 7 16 20 20
Demand 96 113 101 101

Demand Growth (%) 12.0% 18.0% -11.3% 0.0%

PPSF
Capacity 13 13 13 13
Production 4 4 4 4
Imports 1 1 1 1
Exports 2 15 11 11
Demand 4 4 5 5
Demand Growth (%) 3.0% 3.0% 10.0% 0.0%

PFY
Capacity 3442 4499 4635 4751
Production 2385 2495 2735 2927
Imports 31 23 17 17
Exports 571 467 182 180
Demand 2330 2526 2549 2676
Demand Growth (%) 4.2% 8.4% 0.9% 5.0%

PPFY
Capacity 18 18 18 18
Production 17 13 13 15
Imports 2 1 1 2
Exports 2 2 2 2
Demand 17 12 11 14

Demand Growth (%) 22.1% -31.5% -0.3% 22.0%

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VSF
Capacity 325 490 490 490
Production 337 361 364 490
Imports 15 18 25 25
Exports 100 107 108 108
Demand 257 278 268 305
Demand Growth (%) 4.8% 8.1% -3.5% 13.5%

VFY
Capacity 84 84 84 84
Production 43 44 45 60
Imports 10 17 16 10
Exports 6 6 6
Demand 46 53 54 55
Demand Growth (%) 2.7% 14.6% 2.2% 1.1%

NFY
Capacity 58 76 76 76
Production 33 50 50 50
Imports 23 23 2 2
Exports 2 2 2 2
Demand 45 45 52 52
Demand Growth (%) 7.2% 0.0% 15.6% 0.0%

Aromatics Paraxylene
PX demand growth had declined to 1.5% in 2013-14 from 5% in 2012-13.
However, in 2014-15 the demand picked up and registered a growth of
6.3%. PX demand is expected to grow at a robust pace of ~32% with lined
upcoming capacities. PX capacity in 2014-15 was 2442 KT and with RIL
and MRPL capacity addition it is expected to touch 3392 KT in 2015-16.
Further, around 383 KT of capacity will be added in 2016-17 making it a
total 920 KT by MRPL as planned and capacity addition by RIL of 1599 KT
4991 KT in 2016-17. PX import was at 699
KT in 2014-15 and it is expected to increase to 797 KT in 2015-16 and see
a decline in 2016-17 to 759 KT. Meanwhile exports are expected to increase
from 1066 KT in 2014-15 to 1726 KT in 2016-17 before witnessing a dip in
2015-16 to 837 KT.
Table 17: Paraxylene Demand Supply

(KT) 2013-14 A 2014-15 A 2015-16 E 2016-17 E

Capacity 2472 3009 3392 4991
Production 2259 2813 3341 4838
Imports 679 699 797 759
Exports 640 1066 837 1726
Apparent Demand 2298 2442 3219 3839
Demand Growth% 1.5% 6.3% 31.8% 19.3%

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p its 1.8m tonne/year PX unit in the

second half of 2016 and . Meanwhile, Indian
Oil Corp. has delayed the startup of a new 400,000 mt/year p-xylene plant
at Vadodara in Gujarat state, from 2015 to 2017-2018.

Surfactants
Demand for key surfactant LAB increased by 4.3% in 2014-15 and is
expected to maintain the same growth rate in this fiscal as shown in table
below. LAB capacity is expected to remain unchanged till 2015-16 and
witness an addition of capacity by IOC in 2016-17 taking the total capacity
in India to 570 KT in that year.

LAB import is expected to decline to 127 KT in 2016-17 before spiking a

high of 178 KT in 2015-16. Exports are also expected to decline from 24 KT
in 2014-15 to about 2 KT in 2015-16 almost a 90% fall due to rising imports
as a slowdown in production is expected.
Table 18: Demand & Supply of LAB & EO

LAB 2013-14 A 2014-15 A 2015-16 E 2016-17 E

Capacity 530 530 530 570
Production 404 415 373 416
Imports 126 124 178 127
Exports 29 24 2 3
Demand 509 531 552 567
Demand Growth (%) 1.8% 4.3% 4.0% 2.6%
EO 2013-14 A 2014-15 A 2015-16 E 2016-17 E
Capacity 234 253 268 268
Production 187 188 194 201
Imports 0 0 0 0
Exports 0 0 0 0
Demand 187 188 194 201
Demand Growth (%) 8.2% 0.6% 3.3% 3.5%

EO capacity increased from 253 KT in 2014-15 and further is expected to

touch 268 KT in the next fiscal. Debottlenecking of EO capacity by RIL in
2012-13 happened and in 2014-15. RIL capacity would also be enhanced
from 188 KT in 2014-15 to 203 KT in 2015-16. Demand for EO grew at
meagre 0.6% in 2014-15 however it is expected to see an improved growth
of around 3.3% in 2015-16 and further to 4% in 2016-17 touching 201 KT.

Synthetic Rubber

SBR which accounts for 40% of the total synthetic rubber demand is
consumed mostly in the tyre sector.

Considering the large amount of SBR that is being consumed in the

manufacture of tires and tire products, demand is very much dependent on

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the automotive industry and tire sectors as a whole. On a positive note,

growing use of low-rolling-resistance tires to reduce fuel consumption and
decrease CO2 emissions should increase SBR demand.
Table 19: Demand Supply Balance of PBR, SBR, NBR & EPDM

PBR 2013-14 A 2014-15 A 2015-16 E 2016-17 E

Capacity 85 114 124 124
Production 85 101 112 123
Imports 86 70 64 73
Exports 1 2 6 10
Demand 170 171 172 186
Demand Growth (%) 1.6% 0.5% 0.6% 8.1%
SBR 2013-14 A 2014-15 A 2015-16 E 2016-17 E
Capacity 40 140 290 290
Production 40 70 143 223
Imports 245 230 191 130
Exports 15 10 28 30
Demand 270 290 306 323
Demand Growth (%) 17.4% 7.4% 5.5% 5.6%
NBR 2013-14 A 2014-15 A 2015-16 E 2016-17 E
Capacity 20 20 20 40
Production 20 20 20 40
Imports 18 27 32 38
Exports 0 0 0 4
Demand 38 45 50 56
Demand Growth (%) 8.6% 18.4% 11.1% 12.0%
EPDM 2013-14 A 2014-15 A 2015-16 E 2016-17 E
Capacity 10 10 10 10
Production 0 0 0 0
Imports 35 33 40 45
Exports 0 0 0 0
Demand 35 33 40 45
Demand Growth (%) 8.0% -5.7% 21.2% 12.5%

In 2014-15, synthetic rubber demand grew at 5% and is expected to

maintain the same growth rate in 2015-16 before improving to 7% in 2016-
17.

Reliance Industries Ltd. began production at its new 150,000 mt/year SBR
plant at Hazira in September last year, which is the largest in India. The
plant has capability to produce entire range of dry as well as oil extended
grades of emulsion SBR. As shown in table below, SBR demand registered
a growth of 7% in 2014-15 and expected to be around 6% in following two
years. Imports are expected to significantly reduce by 2016-17 onwards with
RIL new capacity coming up to full steam.

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India is expected to jump three places to become the world's No.3 car
market by 2018. This has fuelled a domestic rush to produce more of the
synthetic rubber that is mixed with natural rubber to make tyres.

EPDM demand is expected to improve by 2015-16 to a double digit growth

of ~21% from a negative growth of 5.7% witnessed in 2014-15. Reliance is
the only producer of PBR in India. PBR demand growth rate is expected to
improve to 8% by 2016-17 from a low of ~1% in 2014-15.

Carbon Black Feedstock & Carbon Black

Carbon black is an additive for rubber products which also finds application
as a key raw material in various chemical industries including inks, coatings,
paints, batteries, electrical cables, plastic films, pipes and sealants etc.
More than 60% of the demand for carbon black comes from tyres segment.
According to ATMA (Automotive Tyre Manufacturers' Association), carbon
black constitutes 11% of the raw material cost of tyre companies and forms
20-25% of volumes of the tyre.

The domestic carbon black industry continued to reel under pressure this
year in 2014-15 due to deceleration in growth in automobile sector coupled
with unabated dumping of carbon black in India by China South Korea and
a few other countries which affected the demand growth to drop to negative
growth in from a positive 10% in 2012-13. Total import of carbon black in
India during FY15 was 70 KT and import from China and South Korea
accounted for 90% of total import. Due to this dumping procurement of
carbon black from domestic sources was affected and carbon black
companies in India had to continue with production cut during the year.
Table 20: Demand Supply Balance of CBFS & Carbon Black

2013-14 A 2014-15 A 2015-16 E 2016-17 E

CBFS (KT)
Capacity 1925 1925 1925 1925
Production 1450 1430 1520 1610
Imports 800 1300 1300 1450
Exports 800 720 750 750
Demand 1450 1430 1520 1610
Demand Growth (%) -6.1% -1.4% 6.3% 5.9%
Carbon Black (KT)
Capacity 1040 1040 1040 1040
Production 780 780 832 884
Imports 100 70 100 125
Exports 120 90 200 250
Demand 880 850 932 1009
Demand Growth (%) 10.3% -3.4% 9.6% 8.3%

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Demand for carbon black in India is expected to grow at a double digit of

10% in 2015-16 and is likely to receive significant boost when new capacity
for tyre manufacturing hits the market. Meanwhile, CBFS registered a
negative growth a negative growth of 1% in 2014-15 however it is expected
to remain in the range of 6% in next two years.

Other Key Petrochemicals

Overall other key petrochemicals demand in 2014-15 witnessed a growth of

2% and is expected to witness a robust growth of 10% in next fiscal years.

Benzene demand witnessed a negative growth of 11% in 2014-15 however

is expected to grow at ~5% in 2015-16 with capacity addition lined up by
MRPL, IOCL and boost in domestic sales.

Exports too are expected to further increase by 2016-17 and touch 1020
KT. Toluene demand registered growth of ~9% in 2014-15 and witness a
robust demand growth 18.2% in 2015-16. MXS witnessed a robust growth
in demand at 40% in 2014-15. Meanwhile, OX registered a growth rate of
3.2% in 2014-15. There is no new capacity addition lined up for OX,
however, demand is expected to increase to 303 KT in 2015-16.

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Table 21: Demand Supply Balance of Benzene, Toluene, MXS & OX

(KT) 2013-14 A 2014-15 A 2015-16 E 2016-17 E

Benzene
Capacity 1260 1315 1492 1767
Production 1062 1075 1305 1550
Imports 0 0 0 0
Exports 495 571 775 1020
Demand 567 504 530 530
Demand Growth (%) -4.4% -11.1% 5.2% 0.0%
Toluene
Capacity 270 270 270 270
Production 140 140 140 140
Imports 264 300 380 390
Exports 0 0 0 0
Demand 404 440 520 530
Demand Growth (%) -9.6% 8.9% 18.2% 1.9%
MXS
Capacity 90 90 90 90
Production 86 81 79 90
Imports 34 79 79 75
Exports 18 18 0 0
Demand 100 140 157 164
Demand Growth (%) 20.5% 40.0% 12.1% 4.5%
OX
Capacity 420 420 420 420
Production 412 462 500 485
Imports 65 36 30 22
Exports 205 213 230 220
Demand 278 287 303 287
Demand Growth (%) -1.1% 3.2% 5.6% -5.3%

Outlook for the Overall Indian Petrochemical Industry

5% in 2014-
15.

Combining the demand for all the key segments in the petrochemical
industry aggregate demand for the entire petrochemical sector in India is
likely to increase from 32 MMT in 2014-15 to 35 MMT in 2015-16 and further
to 38 MMT in 2016-17 as depicted in figure below.

At the aggregate level, therefore, demand for petrochemicals in India is

expected to grow at Y-0-Y at 11% in 2015-16 and at 9% in 2016-17.

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Figure 15: Aggregate Petrochemical Demand (All key segments MMT)

45 12%
Demand (MMT) Demand Growth (%)
40
9% 10%
11%
35 4% 38
35
30 8%
32
25
MMT

6%
20
15 4%
10
2%
5
0 0%
2014-15 2015-16E 2016-17E

Polymers are likely to register growth rate of ~14% and 11% in 2015-16 and
2016-17 respectively.

Polyolefins are expected to grow at 16% and 12% in 2015-16 and 2016-17
with the startup of new capacities.

Surfactants are projected to grow at ~4% and 3% in the same period.

Synthetic rubbers are expected to register demand growth in the range of
5% and 7% in 2015-16 and 2016-17 respectively.

Other key petrochemicals expected to grow at ~11% in 2015-16.

demand from the automobiles, packaging, and agriculture and infrastructure
sector is expected to grow at healthy rate with easing of
monetary policy.

This optimism is based on the expectation that India's GDP would again
grow at 7.5% plus in 2015-16.

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Statistical Appendix

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Demand Supply Balance: Polymers (KT)

2013-14 A 2014-15 A 2015-16 E 2016-17 E
LDPE
Capacity 205 205 205 415
Production 190 184 198 207
Imports 255 328 384 440
Exports 0 0 0 0
Apparent Demand 444 515 585 647
Demand Growth% 0.2% 16.0% 13.5% 10.6%
EVA
Capacity 15 15 15 0
Production 11 8 5 0
Imports 120 135 147 162
Exports 0 0 0 0
Apparent Demand 131 143 152 162
Demand Growth% 13.0% 8.9% 6.3% 6.9%
LLDPE
Capacity 980 980 980 1650
Production 794 744 937 1479
Imports 450 599 620 535
Exports 9 8 18 370
Apparent Demand 1236 1328 1546 1781
Demand Growth% -0.3% 7.4% 16.4% 15.2%
HDPE
HDPE Capacity 1795 1830 1830 2810
LLDPE Capacity 980 980 980 1650
Total Capacity 2775 2810 2810 4460
Production 1425 1269 1543 2285
Imports 404 572 569 330
Exports 99 27 112 420
Apparent Demand 1766 1828 2029 2200
Demand Growth% -0.8% 3.5% 11.0% 8.5%
All PE
Capacity 2980 3015 3015 4875
Production 2409 2197 2678 3971
Imports 1109 1499 1573 1305
Exports 108 35 130 790
Apparent Demand 3446 3671 4160 4628
Demand Growth% -0.5% 6.5% 13.3% 11.3%
PP
Capacity 4180 4180 4570 5170
Production 4188 4176 4864 5180
Imports 400 511 551 550

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Exports 893 720 713 700

Apparent Demand 3253 3509 4148 4651
Demand Growth% 3.6% 7.9% 18.2% 12.1%
Polyolefins
Capacity 7175 7210 7600 10045
Production 6608 6381 7547 9151
Imports 1630 2145 2271 2017
Exports 1001 755 843 1490
Apparent Demand 6831 7323 8459 9441
Demand Growth% 1.6% 7.2% 15.5% 11.6%
PVC
Capacity 1402 1402 1482 1482
Production 1293 1256 1354 1406
Imports 1026 1172 1326 1524
Exports
Apparent Demand 2309 2443 2678 2931
Demand Growth% 2.0% 5.8% 9.6% 9.4%
PS
Capacity 472 472 476 490
Production 260 270 280 290
Imports 17 13 14 14
Exports 60 42 44 46
Apparent Demand 217 238 241 249
Demand Growth% -13.3% 9.8% 1.3% 3.3%
Polymers
Capacity 9049 9084 9558 12017
Production 8161 7907 9181 10847
OR (%) 90% 87% 96% 90%
Imports 2673 3330 3611 3555
Exports 1061 797 887 1536
Net Trade -1612 -2533 -2723 -2019
Apparent Demand 9356 10004 11378 12621
Demand Growth% 1.3% 6.9% 13.7% 10.9%

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