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Indian Polymer Industry

Past, Present and Future

G.S. Kapur and Shashikant
Indian Oil Corporation Limited R&D Division Faridabad 121 007, India
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Outline
• • • • • • Indian Journey so far…… Indian Chemical Industry Indian Polyolefin Industry-Outlook Growth Drivers Challenges Conclusions
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India - a snap Shot
Independence in 1947

25% of the population below 20% of the population have no poverty line access to electricity Food Inflation in double digit Ease of doing business index – India ranks 133rd 8 Indian states are poorer than 26 African nations

Ranks 84th in corruption list

China makes 40,000 Kms of road In the same time India makes 6000 Kms
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Still, there are some good news…..
Polypropylene growth over 25% Polyethylene growing @ healthy double digit Aviation sector grew by over 20% Indian, If not Indian are making their presence in global business. Global recession – Not much Impacted. Automotive growth over 20% IInd Fastest growing economy will grow by 8-9%

Large Gas discovery-Changing energy landscape

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Polymer Growth Vs GDP - Global
Per Capita Polymer Consumption vs Per Capita GDP - 2009

PO + PVC ~ 5.7 kg Polymers ~ 8 kg
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Ref: Chemical & petrochemical Manufacturers’ Association, India

7 X Average of Last 5 Years With robust GDP projections. India . all polymers are expected to grow in double digits 6 Ref: Chemical & petrochemical Manufacturers’ Association.4 X GDP HDPE1.Polymer Growth Vs GDP .1 X LLDPE1.India PP1.

India still will import over 3 MMT of Polymers in 2016 .Major Polymers – Outlook India Product HDPE LLDPE LDPE PP EVA PVC 2010 Short Short Short Surplus Short Short 2016 Short Short Surplus Short Short Short Considering all the announced capacities (under construction and commissioned).

Indian Chemical Industry 8 .

consumer durables. food processing • USD 80 Billion Industry – USD 200 Billion by 2020. engineering.Indian Chemical Industry • Indian Chemical industry . automotive.g.An integral part of economy • Playing a key role in agriculture and industrial development • Draws important linkages with downstream industries e. Ranks 13th in the world 9 Industrialization and Economic Growth – Key Drivers .

due to higher cost of power. import duties. taxes and cost of capital and Low focus on R&D – few initiatives to  innovate processes In spite of disadvantages. few proactive companies created 10 sizable International presence . as Indian market develops and per capita consumption increases High degree of fragmentation and small  scale operations  Low cost competitiveness compared to other countries.Indian Chemical Industry Attributes Characteristics of Indian chemical industry:  High domestic demand potential.

Indian Polymer Industry • Polymer industry . India met its demand of polymers through imports Polyethylene and Polypropylene constitute ~ 71% of the commodity resins consumed in India 11 .an integral part of mega petrochemical industry • Industry in India is about four decades old • The domestic polymer industry is dominated by Polyolefin’s • A decade back.

the Plastics Industry in India made a modest but promising beginning by commencing production of Polystyrene • The chronology of manufacture of Indian polymers is summarised as under:1957-Polystyrene 1959-LDPE 1960-SBR 1961-PVC 1968.Chronology Polymer Manufacturing • In 1957.1969 .HDPE 1978-Polypropylene The first Integrated Petrochemical Complex “Indian 12 Petrochemical Corporation Ltd” now a part of RIL .

13 LDPE. PSF. commissioned PFY.Indian Petrochemical Corporation Ltd commissioned First Gas Cracker in India along with downstream MEG.Indian Polymer Industry Major Milestones • 22nd March 1969 – “Indian Petrochemical Corporation ltd incorporated” • March-November 1973 – Xylenes – DMT commissioned • 28th March 1978 to 15th March 1979 – Naphtha cracker commissioned along with all down stream units • 1982 – 1988: RIL entered Petrochemical sector. PX and PTA operations 1992 . LAB. LLDPE and PP plants .

8% of global consumption Indian PE consumption is 3.7% of Global PE capacity.7% of Global PE capacity. (Million TPA) Polymer consumption in India about 3.Commodity Polymer Consumption Indian Scenario • Estimated Global polymer consumption :193 million TPA Name Quantity(MTPA) 71 • PE: 48 • PP: 36 • PVC: 16 • PET: • PS and others: 22 Fig. 14 Indian PP consumption is 4. .

Polymer Consumption India Vs Global 120 100 80 60 40 20 0 India ASEAN China World USA 17 8 30 30 Per Capita Polymer Consumption (Kg) 2007-08 100 15 .

Polyolefin Industry 16 .

Current Feedstock Pattern 17 .

Naphtha Supply & Demand India Continuous to be net exporter of Naphtha 18 Ref: PPAC. Govt of India .

Naphtha Allocation 100 80 60 40 20 0 2006 2008 2010 2012 Power Fertiliser Petrochemical Naphtha consumption shifted to Petrochemicals drastically 19 Ref: PPAC. Govt of India .

7 mmt > > Source: Crisil 20 .Monomer capacity Current Scenario .India Only ~3% of Global capacity Operating rates in 2010 C2 production = 3 mmt C3 production = 2.

Capacity addition >C2 and >C3 2011-2014 >C >C 21 .

Indian Polyolefin Industry Current Scenario LLD/HD Existing Upcoming Source: HPL Market Dominated By Only 4 Manufacturers 22 Ref: IOCL data base .

Paradip ONGC. Pata PE None 1100# 550 90 PP 650 340 None None 440 60 350 1950 Exp Time line 2012-13 Q1 2013 2014 Yet to declare 2011-12 2011-12 2011-12 MRPL None BCPL. Jn GAIL. None (HMEL) Bhatinda Total. KT 1960 #Dahej: 10 mtpa of LNG brings more than 10 Wt% ethane India building huge Polymer capacities 23 Ref: IOCL data base . Dahej (OPAL) RIL. Assam 220 HPCL-Mittal.Petrochemical Capacity Addition -India Company IOCL.

HDPE – Market Segments 2010-11 / 1459 KTA PIPE COAT 2% FILM 6% IM 13% PE-100 6% PE-63/80 7% HM-FILM 18% OTHERS 3% Raffia 18% BM-GP 18% MBM/LBM 9% 24 HDPE Major Market – Blow Molding Ref: IOCL data base .

LLDPE – Market Segments 2010-11 / 1043 KTA Market Dominated by Film Sector 25 Ref: IOCL data base .

PP Market Segments RCP 3% EXT 5% 2010-11 / 2462 KTA ICP 14% F&E 6% Raffia 36% BOPP 10% IM 16% TQ 10% Major Sector – Raffia. Injection Molding and Impact 26 Copolymers Ref: IOCL data base .

Demand Supply Balance (2010-2011) Capacity LDPE LLDPE/HD Swings HDPE All PEs PP 205 1585 1055 2845 3575 Production Import 197 1040 1450 2687 2900 180 23 130 333 245 20 105 125 779 Export Apparent/ Demand 377 1043 1459 2879 2462 27 Ref: Chemical & petrochemical Manufacturers’ Association. India .

Indian Polymer Demand PP. 4441 PVC. 480 LLDPE. 1866 HDPE. 2381 Product 10-11 HDPE LLDPE LDPE PP PVC 1459 1043 377 2462 1926 15-16 2381 1866 480 4441 3331 CARG 10% 12% 6% 12% 10% Growing at 11%+ • Indian polymer growth is robust • In 2015-16 India will import 3 Mn MT of polymers • Case to build additional capacity 28 Ref: 12 th Indian PETROCHEM Conference . 3331 2462 1926 1459 1043 377 LDPE.

India will import ~ 600 KTA of HD/LL in 2016 29 Ref: Chemical & petrochemical Manufacturers’ Association.PE (HD + LL) Demand Vs Supply 5000 4000 3000 2000 1000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 IOCL addition OPAL RIL Supply Demand Domestic Market to Remain Deficit. India .

Demand Vs Supply 700 600 500 400 300 200 100 0 2009 2010 2011 2012 2013 2014 2015 Supply Demand RIL addition • RIL adding 400 KTA of LDPE capacity will ease the situation • LDPE has reached equilibrium with LLDPEhigher growth projected 30 Ref: Chemical & petrochemical Manufacturers’ Association. I ndia .LDPE.

PP . India .Demand Vs Supply 6000 5000 4000 3000 2000 1000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 HMEL IOCL OPAL / GAIL Supply Demand • India will turn PP importer by 2016 • Deficient ~ 500 KTA 31 Ref: Chemical & petrochemical Manufacturers’ Association.

Not much a cause for worry Indian manufacturers have real time opportunities to expand / put up new facilities 32 .India – Fit Case for Capacity Addition Favorable Factors  Demand and growth of Polymers  Feed stock availability  Middle East .

Growth Drivers 33 .

Additional polymer demand will be approximately 8 Mio TPA 34 Very High Growth Rate for Polymer Consumption . if India were to reach 50% of global average.Indian Market Growth Potential Per Capita Polymer Consumption India Global Average : : 8 kg ~ 30 Kg With more than 1 Billion population.

Strong Fundamentals 35 .

Rising India Source: World bank 36 .

October 2010 .Promising India 37 Source: IMF World Recovery Outlook.

Oct’10 38 .Confident India Source: Nielsen Global Consumer Report.

Young India 39 .

CII & Mckinsey Study . growing @2% • 2nd Green Revolution already set in – Fruits and Vegetables • Corporate farming – Large Corporate House already in race • Post Harvest Management (PHM)(wastage 10-26% in India vs. 2% in Groundnut Cultivation Total area: 6.8 million hectares developed countries) • Estimated food wastage is about worth US$ 1 Billion Even as 1% of this land is cultivated using Mulch Films5000 MT PE required for 1 season Application of plastic in Crop management. FAIDA.Agriculture • 25% of Indian GDP. PHM & Water management to play a vital role 40 Ref. Modernizing the Indian Food Chain.

2 million automobile vehicles achieved .Automobiles Total sales of 12.2009-10 41 .Growth .

Growth In Luxury Goods Consumption 42 .

Growth in Communication India second largest mobile user after China 575 Million Mobile user and 37 Million Landline User43 .

Key Growth Areas (MMTPA) 44 .

Demand Change in India (MMTPA) Country FY 05-06 FY 11-12 China US India Japan Germany Others Total 30 26 5 7 6 77 151 44 30 12 8 7 79 180 % of Global Demand (FY 12) 24 17 7 4 4 44 100 45 .

Challenges 46 .

Barriers to Growth 47 .

Environmental Issues 48 .

• India petrochemical capacity addition lags the consumption growth. India will import around 3Mn MT of POs by 2015 . to demand capacity 49 . • There is enough DEMAND expansion. • With all the projects under implementation / announced.16.Summary • Indian demand for petrochemical is robust and growing fast.

• Middle East is not a real threat. C2 and C3 to remain competitive. 50 . • Indian production of Naptha.Summary • Indian refinery capacity and petroleum products to be surplus. though next 2 years to be tough.

Indian Oil Corporation Limited Enabling the growth……. 51 .

Indian Oil Corporation Limited  India’s largest commercial enterprise Highest ranked Indian company in the  Fortune ‘Global 500’ listing: Rank 98th  Revenue for the fiscal 2010-11: US$ 73 billion    52 .

0 Controls 10 of India's 20 refineries 2.0 Haldia 6.65 Guwahati 1.7 15.2 million barrels per day) 53 .00 Paradip CPCL 9.00 Barauni 6.00 Digboi 0.20 MT/annum (1.0 Koyali 13.35 BRPL Mathura 8.Refinery Network Panipat 12.50 IOC Refineries Proposed Refinery Stand Alone Refining capacity: 60.

Pipeline Network Jalandhar N Bhatinda Panipat Rewari Sanganer Ajmer Jodhpur Sangrur Ambala Roorkee Najibabad Meerut Delhi Mathura Tundla Largest pipeline network in the country-9300 Kms Tinsukia Siliguri Bongaigaon Guwahati Barauni Bolpur Chaksu Chittaurgarh Digboi Kanpur Sidhpur Mundra Salaya Kot Ahmedabad Navagam Rajbandh Ratlam Koyali Dahej Maurigram Budge Budge Haldia Paradip Mumbai LEGEND Chennai Sankari    EXISTING CRUDE OIL PIPELINES  EXISTING PRODUCT PIPELINES  ONGOING PRODUCT PIPELINE 54 Trichy Madurai   ONGOING CRUDE OIL PIPELINE O SCALE .

Marketing Network 55 .

Expanding Wings Globalization • Exports • Downstream • Consultancy Gas • Sourcing • City Gas Distribution • Auto LPG • CNG • LNG Terminals • Pipelines Petrochemical • LAB • Px/PTA • Polymers E&P • Domestic • Overseas • Operatorship Alternatives • Biofuel • Wind • Solar • Hydrogen • Nuclear Moving across the value chain Moving beyond the shores .

120 KTA (UOP) PX .600 KTA (Basell-Spheripol) Bulk & gas Planned (Tentative) Liquid Cracker (PDRP-Phase-II) HDPE /LLDPE .553 KTA (Invista) Just Commissioned Naphtha Cracker (ABB Lummus) 857 KTA of Ethylene / 600 KTA of propylene MEG .320 KTA (Scientific Design) Swing LLDPE/ HDPE .300 KTA (Basell-Hostalen) Slurry PP . LDPE (PDRP-Phase-II) PP 650 KTA (PDRPPhase-I) (Basell-Spheripol PX (PDRP-Phase-I) MEG (PDRP-Phase-II) Styrene 600 KTA (PDRP-Phase-I) (ABB 57 Lummus) .350 KTA (Nova-SCLAIRTECH)-Solution HDPE .360 KTA (UOP) PTA .Petrochemical & Polymer Processes in IOCL Implemented MTBE – 38 KTA (CD Tech) 1-Butene – 15 KTA (IFP/Sulzer) LAB .

Petrochemical & Polymer R&D in IOCL State-of-the-art Petrochemical R&D Infrastructure 58 .

Acknowledgement Management of Indian Oil Corporation Ltd for kind permission to present this work Thanks for your Valuable Time and Attention 59 .