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COEX CONVENTION CENTER, SEOUL, KOREA. 07-08 MAY 2015
ASIA PETROCHEMICAL INDUSTRY CONFERENCE
COUNTRY PAPER FROM INDIA
Asia Petrochemical Industry Conference
INDIANPETROCHEMICAL
INDUSTRY
INDIANPETROCHEMICAL
INDUSTRY
Review of 2014-15 & Outlook for 2015-16
COUNTRY PAPER FROM INDIA
INDIANPETROCHEMICAL
INDUSTRY
INDIANPETROCHEMICAL
INDUSTRY
INDIANINDIANPETROCHEMICAL PETROCHEMICAL
INDUSTRYINDUSTRY
INDIANPETROCHEMICAL
INDUSTRY
Chemicals & Petrochemicals Manufacturers’ Association, India
708, 7th Floor, Kailash Building
26, Kasturba Gandhi Marg, New Delhi – 110001, INDIA
Phone: +91-11-43598337, Fax : +91-11-43598337
Email : cpmai@airtelmail.in Web: cpmaindia.com
Asia Petrochemical Industry Conference
COEX Convention Centre, Seoul, Korea.
Asia Petrochemical Industry Conference
S O U T H KO R E A
Seoul
Busan
Dae
gu
Incheon
Daeje
on
Gwangju
Ulsan
Gyeonggi Gangwon
North Chungcheong
South Chungcheong
North Jeolla
South Jeolla
North Gyeongsang
South Gyeongsang
Jeju
Sejo
ng
7-8 May 2015, Seoul, Korea Asia Petrochemical Industry Conference 2015
PART 1PART 1PART 1
INDIAN PETROCHEMICAL INDUSTRY
CONTENTSCONTENTSCONTENTSCONTENTS
SECTION 1
THE INDIAN ECONOMY: REVIEW OF 2014-15 & OUTLOOK FOR 2015-16 1
THE INDIAN ECONOMY REVIEW OF 2014-15 1
SNAPSHOT OF KEY INDICATORS 2
I. IIP – INDEX OF INDUSTRIAL PRODUCTION 6
II. CORE INDUSTRIES PERFORMANCE 8
III. BALANCE OF PAYMENTS 9
IV. FDI 9
V. FOREX RESERVES 10
VI. FII FLOW AND STOCK MARKET 11
VII. CURRENT ACCOUNT DEFICIT 12
VIII. INFLATION 13
IX. RUPEE (₹) 14
OUTLOOK FOR 2015-16: INDIA 15
SECTION 2
PETROCHEMICAL INDUSTRY IN INDIA 19
PETROCHEMICAL INDUSTRY REVIEW OF 2014 & OUTLOOK FOR 2015 19
POLYMERS 19
POLYOLEFINS 21
VINYL’S: PVC 22
STYRENICS 22
A. POLYSTYRENE 22
B. ACRYLONITRILE-BUTADIENE-STYRENE (ABS) 23
C. STYRENE-ACRYLONITRILE (SAN) 23
OLEFINS (INCLUDING BUTADIEN, STYRENE, EDC &VCM) 23
A. ETHYLENE & PROPYLENE 23
B. BUTADIENE 24
C. STYRENE 25
D. EDC & VCM 25
FIBRE INTERMEDIATES 26
SYNTHETIC FIBRES 27
AROMATICS – PARAXYLENE 29
SURFACTANTS 30
SYNTHETIC RUBBER 30
CARBON BLACK FEEDSTOCK & CARBON BLACK 32
OTHER KEY PETROCHEMICALS 32
OUTLOOK FOR THE OVERALL INDIAN PETROCHEMICAL INDUSTRY 34
www.cpmaindia.com
CONTENTSCONTENTSCONTENTSCONTENTS
INDIAN PETROCHEMICAL INDUSTRY
SECTION 3 ((STATISTICAL APPENDIX) 35
DEMAND SUPPLY BALANCE: POLYMERS (KT) 37
DEMAND SUPPLY BALANCE: OLEFINS (KT) 39
DEMAND SUPPLY BALANCE: ABS, SAN, PX & SURFACTANTS (KT) 40
DEMAND SUPPLY BALANCE: FIBRE INTERMEDIATES (KT) 41
DEMAND SUPPLY BALANCE: SYNTHETIC FIBRES (KT) 42
DEMAND SUPPLY BALANCE: ELASTOMERS (KT) 44
DEMAND SUPPLY BALANCE: CARBON BLACK & CBFS (KT) 45
DEMAND SUPPLY BALANCE: OTHER KEY PETROCHEMICALS (KT) 45
TABLES
TABLE 1: USED BASED CLASSIFICATION OF (IIP) 07
TABLE 2: CORE INDUSTRIES GROWTH RATE (IN PERCENT) 08
TABLE 3: INDIA’S GDP GROWTH PROJECTION – 2015 - 16 15
TABLE 4: POLYMER DEMAND SUPPLY 20
TABLE 5: POLYOLEFIN DEMAND IN INDIA ACTUAL & PROJECTED 21
TABLE 6: PVC DEMAND SUPPLY 22
TABLE 7: POLYSTYRENE DEMAND SUPPLY 22
TABLE 8: ABS DEMAND SUPPLY 23
TABLE 9: SAN DEMAND SUPPLY 23
TABLE 10: ETHYLENE & PROPYLENE NET AVAILABILITY 24
TABLE 11: BUTADIENE DEMAND SUPPLY 25
TABLE 12: STYRENE DEMAND SUPPLY 25
TABLE 13: EDC & VCM IMPORT INTO INDIA 25
TABLE 14 : FIBRE INTERMEDIATE DEMAND SUPPLY 26
TABLE 15: DEMAND SUPPLY BALANCE OF SYNTHETIC FIBRE 28
TABLE 16: PARAXYLENE DEMAND SUPPLY 29
TABLE 17: DEMAND & SUPPLY OF LAB & EO 30
TABLE 18: DEMAND SUPPLY BALANCE OF PBR, SBR, NBR & EPDM 31
TABLE 19: DEMAND SUPPLY BALANCE OF CBFS & CARBON BLACK 32
TABLE 20: DEMAND SUPPLY BALANCE OF BENZENE, TOLUENE, MXS & OX 33
FIGURE
FIGURE 1: NEW GDP NUMBERS (YEAR-ON-YEAR IN PER CENT) 3
FIGURE 2: QUARTERLY ESTIMATE OF GDP GROWTH (IN PER CENT) 4
FIGURE 3: SECTORAL GROWTH IN 2013-14 AT CONSTANT PRICES (%) 5
FIGURE 4: ESTIMATED GROWTH IN SECTORS IN 2014-15 5
FIGURE 5: SHARE OF SECTORS IN GDP (%) 6
FIGURE 6: INDEX OF INDUSTRIAL PRODUCTION (IIP) 7
FIGURE 7: FDI INFLOWS 9
INDIAN PETROCHEMICAL INDUSTRY
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PART 2PART 2PART 2
CONTENTSCONTENTSCONTENTSCONTENTS FIGURE 8: FOREX RESERVES INCREASE TO $333.2 BILLION 10
FIGURE 9: FII FLOW IN 2014-15 11
FIGURE 10: STOCK MARKET PERFORMANCE 11
FIGURE 11: Q3 CAD AT 1.6% OF GDP AT $8.2 BILLION 12
FIGURE 12: TRADE DEFICIT AT $8.32 BILLION 13
FIGURE 13: RATE OF INFLATION (IN PERCENT) 13
FIGURE 14: RUPEE MOVEMENT IN LAST ONE YEAR 14
FIGURE 15: PER CAPITA POLYMER CONSUMPTION VS PER CAPITA GDP ~ 2013 19
FIGURE 16: AGGREGATE PETROCHEMICAL DEMAND (ALL KEY SEGMENTS – MMT) 34
INDIAN COUNTRY REPORT
PRESENTATIONS FOR COMMITTEE MEETINGS-APIC-2015
INDIAN PETROCHEMICAL INDUSTRY
REVIEW & OUTLOOK OF INDIAN ECONOMY 49
REVIEW & OUTLOOK OF PETROCHEMICAL INDUSTRY 61
POLYOLEFINS
REVIEW OF POLYOLEFINS SECTOR 67
OUTLOOK FOR POLYOLEFINS SECTOR 71
PVC (VINYL)
REVIEW OF VINYL SECTOR 75
OUTLOOK FOR VINYL SECTOR 79
STYRENICS
REVIEW OF STYRENICS SECTOR 83
OUTLOOK OF STYRENICS SECTOR 85
SYNTHETIC RUBBER (ELASTOMERS)
REVIEW OF ELASTOMERS 89
OUTLOOK FOR ELASTOMERS 93
SYNTHETIC FIBER RAW MATERIALS
REVIEW OF FIBRE INTERMEDIATES SECTOR 97
OUTLOOK FOR FIBRE INTERMEDIATE SECTOR 101
AGRICULTURE &
ALLIED Industries
Retail&
MANUFACTURING
ELECTRICITY
GAS & WATER
CONSTRUCTION&
Real Estate
International TRADE&
BUSINESS SERVICES
TRANSPORT &
COMMUNICATION
Health
&
Finance
Consumer Durables&
Electronics
Alternative
Energy &
Sustainability
COMMUNITY, SOCIAL &
PERSONAL SERVICES
MINING &
QUARRYINGRealEstate
Solar Power
The Indian Economy
SECTION 1
Asia Petrochemical Industry Conference
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Review of 2014-15 & Outlook for 2015-16
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INDIAN PETROCHEMICAL INDUSTRY
The Indian Economy: Review of 2014-15 & Outlook for 2015-16
The Indian Economy Review of 2014-15
The last year has been a fortuitously good one for the Indian economy with a sea change in the macroeconomic parameters and a sustainable turnaround on the cards.
At a time when concerns have been raised about global growth prospects, the Indian economy has marched on and has in fact entered a sweet spot.
As a start, Gross Domestic Product (GDP) growth, which had plummeted to sub 5% levels in past two fiscal years, finally seems to have picked up on the back of a cyclical rebound and some genuine improvement.
Growth in the current year, while not spectacular, has moved up firmly into the 5%+ handle. This improvement has come on the back of improved performance in the industrial sector, stable growth in the services sector and a surprisingly resilient agriculture sector.
Further, policy action on the environmental clearances and mining licenses has helped prop up sentiment while a push to some stuck projects have aided growth prospects.
Encouragingly, the pick-up in growth seems to be taking place at a time when inflation is on the downtrend as effects of the past slowdown and the massive fall in global commodity prices is filtering through the economy.
Inflation levels have continued to surprise on the downside and have printed comfortably under the Central Bank’s comfort zone. Price levels have seen an across the board moderation as food, fuel and service price inflation has come down. This moderation in inflation has also had an impact on interest rates as the Reserve Bank of India (RBI) has finally started its rate cutting cycle with its first rate cut in January earlier this year.
The RBI had established targets for inflation under its new policy regime and as such those targets have been met comfortably and set the stage for a further easing of policy in the coming months. That said, the RBI continues to remain vigilant on the external front and the possible threat of capital outflows in response to the normalization of monetary policy in the US.
The situation is further being buttressed by a perceptible improvement in the external account metrics with the current account deficit coming under control despite the government lifting most of the import restrictions from the last year. Imports have fallen sharply in response to the halving of global crude oil prices and while exports have suffered too, service exports have held up as growth in the US has rebounded in the current year.
FIIs have invested a net of $43.5 billion so far in 2014-15— expected to be their highest investment in any fiscal year. Of this, a huge chunk—$26.3 billion—was invested in debt and it is their record investment in the asset class, while equities absorbed $17.2 billion.
BSE's benchmark Sensex witnessed a consistent rise in 2014 with a growth of around 40% and has already risen 29.2% so far in fiscal year 2015, and if this sustains, it would be its best performance since financial year 2010.
The more important and stable flows through the Foreign Direct Investment (FDI) route have also picked up to touch highest inflow in last 29 months $4.48 billion in January as the government increased the level of permissible investments into some sectors.
The Indian rupee has fallen a mere 4.9% in fiscal year 2015, compared with a 30.1% decline in Brazil’s real and a 43.5% fall in Russian rouble. India has been a relatively stable currency compared with other emerging markets in 2014. Making it attractive to invest in Indian debt.
The capital markets have continued to scale record levels as euphoria has built up on the possible trajectory of the BSE's benchmark Sensex . The markets seem to have priced in a favourable policy environment and a consequent increase in corporate performance in the coming years.
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Overall there is a real sense that a new set of reforms and the enthusiasm in the markets can lead India towards another prosperous era of high growth. A good monsoon season in 2015 -16 is expected to further increase purchasing power in rural India which has been the silver lining in the Indian growth story.
Snapshot of Key Indicators
The much awaited first “full budget” from the new government was presented on the last day of month of February 2015. It extended the fiscal consolidation roadmap to 3 years from 2 years but this came with an effort to raise investment spend. Other incentives included staggered rate cut for corporate, merging of FDI/FII ownership limit and some minor tax breaks for individual investors.
Further, clarity was given on GST and GAAR and there was significant emphasis on the socio-economic programs. The backdrop to the Budget has been the improving macro-economic situation for India at a time when many economies are in turmoil.
The change in the base year of measuring national accounts showed that India's economy had fared much better than previously thought and it likely that India would exceed previous estimates of growth in FY16.
India has been one of the principal beneficiaries of low crude oil and energy prices. In addition the government's resolve to curtail subsidies as well as focus them on the needy means that the government finally has some fiscal room.
There seems to be a significant emphasis on providing stimulus to 'Make in India' vision (as per budget document) as indicated by tweak in taxes, laying down measures which could address ease of doing business and encouraging domestic and foreign direct investment.
The government also changed the methodology for calculation of GDP data, which included revision in the base year for national accounts from FY05 to FY12, transition to international practice of stating headline GDP at market prices from GDP at factor cost, and also incorporating new data sets.
India has now moved from the base of 2004-05 to 2011-12 as the new base year for GDP computation. India’s headline GDP will now also refer to GDP at market prices, which is in line with international practices, as opposed to GDP at factor cost.
The Central Statistics Organization (CSO) has subsequently also made accounting changes in line with the System of National Accounts (SNA), and included new and more comprehensive data sources. This change has resulted in real GDP growth being revised upwards to 6.9%Y-o-Y for FY14, as against 4.7% Y-o-Y declared earlier under the old series.
Figure 1: New GDP Numbers (year-on-year in per cent)
GDP Growth rate (Old series) (%) GDP Growth rate (New series) (%)
Source : CSO
2011-12 2012-13 2013-14 2014-15
GDP Growth (year-on-year in per cent)
6.7
4.55.1
4.7
6.9 7.4
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Similarly, GDP growth for FY13 has been revised upwards to 5.1% Y-o-Y from 4.5% earlier. However, nominal GDP under the new series remains largely unchanged at ₹113.5 trillion for FY14, and therefore is likely to have minimal impact on key ratios like fiscal deficit, current account deficit etc.
The upward revisions have primarily come from higher consumption expenditure and weaker imports under the new series. Further, there are improvements in the way data is collected as there is a more comprehensive coverage of the corporate sector (for both manufacturing and services) through the use of the annual accounts of companies filed with the Ministry of Corporate Affair (in the MCA 21 database). Two, until now, the manufacturing data was compiled factory-wise. Now, activity at the enterprise-level is taken. This means selling and marketing expenses are also reckoned, instead of just production costs.
The change - The manufacturing sector, in particular, has shown a far better performance. The change in measuring the value addition in the manufacturing sector is one of the main reasons for the bump-up in growth numbers. Data on manufacturing and services now comes from almost the universe of approximately 5 lakh companies as compared to only 2500 earlier.
Figure 2: Quarterly Estimate of GDP Growth (in per cent)
Quarterly estimates have also been released under the new methodology where the government has used tax data for collecting information on services while private corporate performance has been included for compiling industrial estimates. Growth of GVA at basic prices (at constant 2011-12 prices) rose from 7.0% in Q1FY15 (5.7% growth of GDP at factor cost on 2004-05 series) to 7.8% in Q2FY15 (5.3% growth of GDP at factor cost on 2004-05 series), before easing to 7.5% in Q3FY15 in y-o-y terms.
A careful look at the disaggregated data would suggest that the higher growth would be driven by domestic demand while government final expenditure and investments are also expected to grow. The new series shows agriculture growth nearly one point lower at 3.7% (4.7% in old series) but with a larger share in aggregate output—an average 4.3 percentage points in last 3 years.
Real GDP (2004-05) Real GVA basic (2011-12)
Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15
4.7
5.2
6.6
4.6 4.6
5.3
7.57.2
5.7
7.0
5.3
7.87.5
Source : CSO
Quarterly Estimate of GDP Growth (in per cent)
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Construction rebounded in FY14 at 2.5% over a minus 4.4% contraction in FY13; this is again buttressed by RBI’s Industry wise deployment of bank credit data that shows outstanding credit to construction rose 17.7% against 7.3% in FY13.
Figure 4: Estimated Growth in Sectors in 2014-15
Figure 3: Sectoral Growth in 2013-14 at constant prices (%)
Source : CSO
Agriculture & Allied
Mining & Quarrying
Manufacturing
Electricity, Gas and Water
Construction
Trade, Repair and restaurants
Transport, Storage, Communication
Financial, Real estate & business Services
Community, Social & Personal Services
Total GVA
3.74.7
5.4-1.4
-0.75.9
4.82.5
1.613.3
1.07.3
6.17.9
12.9
7.95.6
6.64.7
-4 -2 0 -2 4 6 8 10 12 14
2011-12 series 2004-05 series
Growth in 2013-14 at constant prices (%)
Source : CSO
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While the manufacturing segment is expected to expand 6.8% (5.3% in 2013-14), electricity and related sectors are estimated to expand 9.6%, against 4.8% in 2013-14.
Growth in mining and quarrying, however, is expected to fall to 2.3% from 5.4% in FY14, while growth in the construction sector is estimated at 4.5%, against 2.5% during the previous year. In 2014-15, the services sector is estimated to grow a stellar 8.9%.
In terms of share agriculture show a reduction from 18.2% to 18% as per new series. Mining’s share has also been increased with industry now accounting for 30.7% of GDP from 24.7% estimated earlier. The service sector’s share has reduced to 51.1% from 57% earlier led by a smaller share of the Trade, hotels & restaurants component.
Figure 5: Share of Sectors in GDP (%)
In short the service sector continues to lead growth, manufacturing shows a revival, while agriculture has once again slowed down. One can conclude that a higher growth rate in 2014-15 is expected to help the government achieve a better fiscal deficit and current account deficit ratios calculated as a percentage of GDP. The government has set a fiscal deficit target of 4.1% of GDP for the year to March. Despite crossing the limit in value terms, a favourable base due to higher GDP growth may help the government achieve the target. Similarly, the current account balance, which is expected to turn positive anyway by the fourth quarter of 2015-16, may get a boost from a higher GDP base.
i. IIP – Index of Industrial Production
Industrial production grew 2.6% in January2015 mainly on account of improvement in manufacturing activity and better offtake of capital goods. The growth in factory output, as measured by the Index of Industrial Production (IIP), was 1.1% in January 2014. For the April-January period of 2014-15, IIP grew 2.5% as against a meagre rise of 0.1% in same period of the last fiscal as per the data released by CSO. The growth in factory output, as measured by the IIP, was 1.1% in Jan’14.
For the April-January period of 2014-15, IIP grew 2.5% as against a meagre rise of 0.1% in same period of the last fiscal as per the data released by CSO.
Meanwhile, the December IIP has been revised upwards to 3.23% from the provisional estimates of 1.7% released last month. As per government data, manufacturing output, which constitutes over 75% to the index, grew by 3.3% in January compared to a meagre growth of 0.3% in the same month a year ago.
2004-05 2011-12 2004-05 2011-12 2004-05 2011-12 2004-05 2011-12 2004-05 2011-12 2004-05 2011-12
17.5 18.0 18.2 18.0
26.3
32.0
24.7
30.7
56.2
50.0
57.0
51.3
Agriculture Industry Services
Source : CSO
(Based on gross value added at current prices)
Figure 6: Index of Industrial Production (IIP)
For April-January period, the sector saw an output growth of 1.7%, compared to a contraction of 0.3% in the year-ago period. The production of capital goods, a barometer of demand, grew by 12.8% in January as against a contraction of 3.9% in same month of last year. During the April-January period, capital goods output grew by 5.7% as against a dip of 0.8%. Fourteen out of the twenty two industry groups in the manufacturing sector have shown positive growth during the month of January year-on-year. According to the IIP data, the power generation grew by 2.7% in January compared to 6.5% in the same month last year.
Table 1: Used based Classification of (IIP)
During April-January period, electricity production grew by 9.3% compared to a growth of 5.7% in the corresponding period last fiscal.
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Trend in IIP Growth
Use-Based Classification
Weight
Month
Dec-13Jan-13
Dec-14Jan-15
April-Jan FY14April-Jan FY15
45.68%
3.0%2.8%
5.7%4.5%
1.6%7.4%
-2.5%-3.9%
5.3%12.8%
-0.8%5.7%
Basic Capital
5.2%4.3%
1.0%-0.8%
3.2%1.5%
8.83%
Intermediate
15.69% 8.46%
-16.4%-8.3%
-8.9%-5.3%
-12.5%-14.2%
Durables Non Durables
2.8%4.5%
5.1%-0.1%
5.7%1.9%
21.35%
Source :CSO
Index of Industrial Production
6
5
4
3
2
1
0
-1
-2
-3April 2013 Jan 2015
1.5
2.6
Source: CSO
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However the output in the mining sector contracted by 2.8% in January, compared to a growth of 2.7% in the same month last year. During April-January period, output has grown by 1.3% compared to a contraction of 1.1% y-o-y. The overall consumer goods output has declined by 1.9% in January compared to a dip of 0.5% in the same month last year. During April-January, the output of these goods contracted by 4.7% compared to a dip of 2.7% in the corresponding period last fiscal.
Similarly, consumer durables output also contracted by 5.3% compared to a decline in production by 8.3% in the same month last year. In April-January the output declined by 14.2% compared to a dip of 12.5% in the same period last fiscal. The consumer non-durable production also contracted by 0.1% in January compared to a growth of 4.5% in same month last year. During April-January the output grew by 1.9% compared to a growth of 5.7%. The intermediate goods also saw decline in production by 0.8% in January compared to a growth of 4.3% in same month last year. However the basic goods output grew by 4.5% in January compared a growth of 2.8% in same month last year.
Some of the important items showing high positive growth during January over the same month in previous year include Polythene bags, Woollen Carpets, Conductor Aluminium, Stainless/alloy steel, Gems and Jewellery, Plastic Machinery including Moulding Machinery, PVC Pipes and Tubes, Cable, Rubber Insulated, Carbon Steel, Rice, Air Conditioner (Room) and Boilers.
With the release of the new GVA series, IIP data released each month with fiscal 2005 as the base year will now be a poor representative of industrial growth. A government press release has said the revised IIP series taking fiscal 2012 as the base year will only be released in March 2016.
ii. Core Industries Performance
The core sector contributes 38% to the overall industrial production, a parameter that RBI takes into account while framing its monetary policy. Growth in eight core industries slowed in 1.8% in January 2015, the lowest in 13 months.
Negative growth in crude oil and natural gas and low growth in steel, cement and electricity have led to the dip in the overall growth rate of core industries. The eight core sector industries — coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity — had expanded by 3.7% in January, 2014. The growth was 2.4% in Dec’14.
Table 2: Core Industries Growth Rate (in percent)
Production of crude oil and natural gas contracted by 2.3% and 6.6% respectively, according to the data released by the Commerce and Industry Ministry. Output in steel, cement and electricity registered growth during the month under review, but the expansion is lower as compared to that in January 2014.
Weight
Month
Nov-13Dec-13Jan-14
37.98%
3.2%4.0%3.7%
6.7%2.4%1.8%
4.0%4.1%
Coal
4.4%
Crude Oil
5.2% 1.7%
NaturalGas
RefineryProducts
5.9%
Source : Index of Eight Core Industries, Ministry of Commerce and Industry, Office of the Economic Advisior
1.2%
Fertilizers Steel
6.7% 2.4%
Cement Electricity
10.3%
Index ofCore Industries
Nov-14Dec-14Jan-15
3.3%1.1%1.2%
14.5%7.5%1.7%
1.5%8.1%
1.2%1.6%3.0%
-0.1%-1.4%-2.3%
-0.2%-1.0%
-11.2%-9.9%-5.2%
-2.9%-3.5%-6.6%
-14.0%-5.2%
-5.2%-1.9%-4.2%
8.1%6.1%4.7%
1.2%0.7%
0.6%4.1%1.2%
-2.8%-1.6%7.1%
2.5%-0.5%
10.1%10.4%10.8%
1.3%3.8%0.5%
11.4%1.6%
3.9%1.2%2.0%
11.3%3.8%0.5%
3.5%7.1%
6.3%7.6%6.5%
10.2%3.7%2.7%
5.6%8.9%
April-Jan 2013-14April-Jan 2014-15
Growth in Index of Core Industries
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However, coal and refinery products output grew by 1.7% and 4.7% respectively against 1.2% and contraction of 4.2% in the year ago period. During April-January period, the eight sectors grew by 4.1% as against 4% in the same period of the previous fiscal.
iii. Balance of Payments
On a quarter-over-quarter basis, India’s current account deficit (CAD) narrowed to US$ 8.2 billion (1.6% of GDP) in Q3 of 2014-15 from US$ 10.1 billion (2.0% of GDP) in Q2; on a year-on-year basis, however, the CAD doubled (from US$ 4.2 billion or 0.9% of GDP in Q3 of 2013-14).
The merchandise trade deficit (US$ 39.2 billion during Q3 2014-15 ) widened on a q-o-q basis on account of a larger decline in merchandise exports (7.3%) than in merchandise imports (4.5%); in terms of y-o-y changes too, the trade deficit in Q3 2014-15 widened due to a decline in exports (1.0%), while imports increased (4.5%).
Thus, the reduction in the CAD in Q3 2014-15 was primarily on account of net exports of services which picked up in q-o-q terms on the back of an improvement in net earnings through travel and software services, and lower net outflows under primary income (profit, dividend and interest).
Gross private transfer receipts, representing remittances by Indians employed overseas, amounted to US $ 17.5 billion and provided sustained support to the BoP with a share of 12.6% of current receipts, broadly the same level as in the preceding quarter and a year ago.
On a BoP basis, there was a net accretion of US$ 13.2 billion to India’s foreign exchange reserves in Q3 of 2014-15, almost double the accretion in the preceding quarter, but lower than in Q3 of 2013-14 which was bolstered by special non-resident and banks’ overseas borrowings.
iv. FDI
Foreign Direct Investment (FDI) inflows have picked up this year and have been much more consistent over the last seven quarters. Inflows have barely fluctuated in the first three quarters with funds of US$ 8.3 billion in Q1, US$ 8.5 billion in Q2 and US$ 8.4 billion in Q3 of 2014-15 coming in respectively. In terms of the sector specific flow, at US$ 2.5 billion the telecommunications sector received the highest FDI inflows with a percentage share of 13%. Factors such as the 3G and 4G spectrum auction as well as investment in network rollout have led to this growth in investment. This is followed by the services sector with FDI inflows to the tune of US$ 1.8 billion.
Figure 7: FDI Inflows
Foreign Direct Investment Inflows (US$ billion)15
13
11
9
7
5
3
1
-1
Source: RBI
Q1 Q2 Q3 Q4
2011-12
Q1 Q2 Q3 Q4
2012-13
Q1 Q2 Q3 Q4
2013-14
Q1 Q2 Q3
2014-15
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Net FDI inflows to India shot up to a record level of USD 5.5 billion in January from USD 3.97 billion in the preceding month. The government’s cabinet has recently cleared a proposal which allows 100% FDI into railway infrastructure. The government has further initiated easier FDI norms for the construction sectors which allow 100% overseas investment. Another major decision has been to further open up the defense sector with foreign investment cap of 49%. Further, the Union Cabinet cleared a bill, to further open up the insurance sector by increasing the foreign investment cap from 26% to 49%. All these reforms have further given a boost to the investor sentiment and higher foreign investment in critical sector can be expected in the coming months giving a boost to the overall growth prospects of the economy.
v. Forex Reserves
The foreign exchange reserves as on 13 February 2015 stood at $333.2 billion as against $304.2 billion till March 2014-end and $292.1 billion till March 2013-end.
The lower trade and current account deficit, coupled with buoyant capital inflows, resulted in increase in foreign exchange reserves in 2013- 14 and 2014- 15.
Figure 8: Forex Reserves increase to $333.2 billion
The forex reserves in 2011-12 were $294.4 billion. The most recent accumulation to the reserves can help India cover its import bill for nearly ten months now according to trade and market analysts.
vi. FII Flow and Stock Market
Net foreign investment inflows to India increased sharply in January 2015. They rose to an eight-month high of USD 12.17 billion in the month from USD 3.01 billion in the preceding month.
35
40
45
50
55
60
65
70
0
50
100
150
200
250
300
350
Forex Reserves
RBI buys dollars, reserves up, dollar rupee down
Source: RBI *Feb'15 reserve denote data till 13th Feb'15 and Exchange rate for 15th Feb'15
400
Ap
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1J
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01
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03
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03
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04
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04
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05
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05
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06
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07
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10
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11J
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Oc
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12
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13
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14
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l'1
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14
Ja
n'1
5
Exchange Rate (INR/USD)Forex Reserve in ($Bn)
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Figure 9: FII Flow in 2014-15
This was more-than-double the average monthly level of inflows of USD 6.04 billion that were seen during the first nine months of 2014-15.
Foreign investment inflows to India shot up to USD 65.52 billion during the first ten months of 2014-15 from USD 18.19 billion in the same period a year ago. A turnaround in portfolio investments flows and a rise in net FDI inflows led to the sharp increase in foreign investment inflows. India witnessed net inflows of portfolio investments amounting to USD 35.14 billion during April 2014-January 2015 as against net outflows of USD 1.91 billion in the same period a year ago.
Net FDI inflows to India rose by 51.1% to USD 30.37 billion. India witnessed net inflows of portfolio investments amounting to USD 6.63 billion as compared to outflows of USD 0.38 billion in the preceding month. This was the highest amount of portfolio investment inflows in the last eight months.
The Sensex witnessed a consistent rise in 2014 with a growth of around 40%. Indian markets scaled new heights on slowing inflation and a surge in FII in-flows due to improving macro data and election optimism.
Figure 10: Stock Market Performance
Source : SEBI & NSDL
6
4
2
0
-2
-4
-6
FII inflows in 2014-15
Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14
Equity (US$ billion) Debt (US$ billion)
31000
29000
27000
25000
23000
21000
19000
17000
15000
19623
Source : BSE
Note : Sensex values denote the high of the day and data for March'15 till 4th March'15
Touched all time high on 4th March'1530025
Movement of Sensex (Apr'13-Mar'15)
Ap
r-13
May-1
3
Ju
n-1
3
Ju
l-13
Au
g-1
3
Sep
-13
Oct-
13
No
v-1
3
Dec-1
3
Jan
-14
Feb
-14
Mar-
14
Ap
r-14
May-1
4
Ju
n-1
4
Ju
l-14
Au
g-1
4
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan
-15
Feb
-15
Mar-
15
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Indian equity markets started 2015 on a buoyant note and touched an all-time high of 30,024.74 on 3rd March 2015 driven by favourable macroeconomic indicators which included: an uptick in IIP, significant drop in trade deficit, both CPI & WPI inflation within the comfort zone (despite rising on a month–on-month basis) and substantial foreign inflows
Further, a surprise rate cut by RBI, IMF's indication (as per world economic outlook released recently) that India will grow at a faster pace than China in 2016 and a massive monetary stimulus by ECB (which could add to inflows in emerging markets) kept the sentiments upbeat and supported the rally.
vii. Current Account Deficit
India’s current account deficit (CAD) narrowed to 1.6% of gross domestic product (GDP) in the quarter ended 31 December, compared with 2% of GDP in the previous quarter, as net services exports rose and capital outflows fell.
However, on a year-on-year basis, the CAD doubled (from $4.2 billion or 0.9% of GDP in Oct-Dec of 2013-14).
The merchandise trade deficit widened in the December quarter to $39.2 billion from $38.6 billion in the September quarter on account of a sharper decline in merchandise exports (7.3%) than in merchandise imports (4.5%).
Many analysts are of the opinion that the continuing decline in crude prices will see the country posting a current account surplus in the current March quarter, which would be the first surplus since the March quarter of 2007.
“On a cumulative basis, the overall balance of payments showed considerable improvement on a y-o-y basis on the back of a higher growth in merchandise exports and a marginal rise in merchandise imports, with a sizeable increase in net financial flows financing the CAD and enabling a large build-up of reserves,” – a statement by Reserve Bank of India.
Figure 11: Q3 CAD at 1.6% of GDP at $8.2 billion
India’s trade deficit hit an 11-month low in January to $8.3 billion as its merchandise exports as well as imports contracted for the second month in a row on the back of easing global crude oil prices. While increasing non-oil imports was comforting, a double-digit fall in goods exports by 11.2% to $23.9 billion may put pressure on the government to announce more measures to protect export-driven industries.
Merchandise imports in January fell 11.4% to $32.2 billion while non-oil imports rose 3.45% to $24 billion.
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Gold imports rose 8.13% to $1.6 billion in January; also, while petroleum exports declined 48.7% to $2.4 billion, petroleum imports fell 37.5% to $8.2 billion compared with the same month a year ago.
Figure 12: Trade Deficit at $8.32 billion
viii. Inflation
Inflation based on the wholesale price index (WPI) declined for the fourth consecutive month at -2.06% in February 2015 from -0.39% in January, mainly due to a drop in fuel prices even as food prices rose. Fall in global crude prices have helped India, a major crude oil importer, reduce its import bill and curtail inflation. However, rising food prices, particularly those of vegetables, are likely to exert an upward pressure on prices.
While fuel and power prices fell 14.72% in February, food prices rose 7.74%, according to data released by the commerce ministry. Like GDP, the Consumer Price Index (CPI) has been reformatted. The new index carries a higher weight for education and health services, but has a lower weight for food and fuel items, which authorities say better reflects changing consumption patterns.
The new series of CPI is based on the base year of 2012 changed from 2010. Retail inflation accelerated to 5.37% in February lower than 7.88% in February last year but higher from 5.19% in the previous month because of higher food and fuel prices. The inflation figure for December was revised to 4.28% from 5%.
Figure 13: Rate of Inflation (in percent)
In the new CPI series Food and Beverages now has a combined weight of 45.86 as compared to 47.58 earlier. Clothing and Footwear combined weight also got a boost to 6.53 compared to 4.73 earlier, while Fuel and Light combined weight fell to 6.84 from 9.49. The Reserve Bank of India expects inflation to be around the target level of 6% by next January.
5.03
-0.39-2.06
-0.66
7.748.32
WPI WPI Food
Jan
-14
Feb
-14
Mar-
14
Ap
r-14
May-1
4
Ju
n-1
4
Ju
l-14
Au
g-1
4
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan
-14
Feb
15
9.668.88
4.62
8.60
6.77
2.04
4.39
5.37
6.76
Jan
-14
Feb
-14
Mar-
14
Ap
r-14
May-1
4
Ju
n-1
4
Ju
l-14
Au
g-1
4
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan
-14
Feb
15
CPI CPI Food
Source : CSO
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The wedge between headline CPI inflation and headline WPI inflation has widened for the fourth consecutive month, partly reflecting the different composition of these two indices. The disinflation displayed by the WPI Index since Nov’14 is primarily on account of the global trend of softening prices of various tradable commodities, which dominate this Index. In contrast, the CPI has a higher weightage of non-tradable services as well as food items, the prices for which reflect domestic demand-supply trends.
Notwithstanding the divergence in headline inflation, food inflation in Feb’15 was elevated in terms of both the CPI (6.8%) and WPI (7.7%), which remains a cause of concern. While food prices underwent an m-o-m correction in Feb’15 led by vegetables, this trend may reverse in the ongoing month, following the crop damage caused by unseasonably heavy rainfall as well as the rise in retail prices of diesel and petrol in early-March 2015. Nevertheless, crude oil and retail fuel prices are considerably lower than the year-ago period, which would limit the uptick in y-o-y WPI inflation in March 2015.
ix. Rupee (₹)
2014 has been a stable year for the Indian Rupee [₹], after a very volatile 2013. The rupee has held up relatively well so far (it was the among the best YTD performers among global currencies). According to Bloomberg, the rupee has gained 1.4% against the dollar since the start of 2015. This places it near the top of the rankings for emerging market currencies. The resurgent Russian Rouble leads the table with a 1.6% gain.
Figure 14: Rupee Movement in last one year
The rupee’s performance compares very favourably with currencies such as the Brazilian Real (down 12.3%), Turkish Lira (down 9.7%) and the Indonesian Rupiah (down 4.5%).
According to the Survey, a $10 reduction in the price of oil improves the current account balance by $9.4 billion. While currencies of crude exporters have taken a hit, the rupee has thrived this year.
The other point in the rupee’s favour is the positive real rates of interest in India. The risk-free real rate of interest currently stands at 2.6%. This compares favourably with most other countries. For instance, the corresponding rate for the US is 2% and Indonesia, 1.2%. It is perhaps these attractive yields on debt instruments and the soaring stock market that have made foreign portfolio investors pump close to $11 billion into equity and debt, double the amount in the year-ago period.
The threat, however, stems from four factors: volatility in the currency market if the US hikes rates; turbulence from a Grexit; exports getting derailed by a slowing global economy; crude rates spiking on geopolitical tensions.
In 2015, Rupee is expected to benefit from – (i) pick-up in economic growth, leading to higher capital inflows, and (ii) better trade balance due to lower commodity prices, especially crude oil. The medium-term bearish outlook remains intact for the rupee. Its key resistance is at 61 and a fall to 63.6 and even 64 looks likely in the medium term.
Jan
-14
Feb
-14
Mar-
14
Ap
r-14
May-1
4
Ju
n-1
4
Ju
l-14
Au
g-1
4
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan
-15
Feb
-15
63.0
61.0
59.0
62.1 62.1
60.960.83
59.26
61.7
62.7562.01
Rupee Movement
Source : RBI
Outlook for 2015-16: India
India currently stands at the threshold of a new exciting phase of transformation. Despite the relatively slower growth recently, the Indian economy is poised to cross the US$ 2 trillion mark in FY15.
The installation of a new majority Government at the Centre has unleashed a wave of optimism about India's economic prospects. There are some early positive signs that the government will prioritize employment, infrastructure and growth.
While expectations are running high, the government has also signalled that the pace of change and reform would be modulated.
In this context, the first budget of the government has served to provide a sense of direction, with the hope that reform and growth push will continue incrementally over the next few months.
In fact, GDP growth is expected to recover towards the second half of FY15 and gather significant pace by FY16. The increment in GDP growth will naturally lead to higher disposable incomes.
Improvement in macro-economic variables which includes encouraging GDP number (the FY15 advance estimate ahead of expectations), revised GDP projection by IMF for India, an uptick in IIP, substantial drop in trade deficit, supportive figures for CPI & WPI inflation and robust foreign inflows all are supporting the uptrend at a time when many economies are in turmoil.
Broadly speaking, the revived optimism in the economy bodes well for the future.
Optimists point out that GDP grew by 7.5% year on year in the fourth quarter of 2014, outpacing even China. Far more important is that the economy seems to be on an increasingly stable footing. Inflation has fallen by half after floating above 10% for years.
The current-account deficit has shrunk; the rupee is firm; the stock market has boomed; and the slump in commodity prices is a blessing for a country that imports four-fifths of its oil. When the IMF cut its forecasts for the world economy, it largely spared India.
Table 3: India’s GDP Growth Projection – 2015 - 16
The dynamics in India are changing fast, and even though the impact on the economy has been limited to date, the government’s efforts to revive the economy are improving the long-term outlook.
This is evident from the recent upward revision of India’s growth forecast for FY 2015 – 16 by the IMF, ADB and the OECD, as well as an outlook upgrade by some of the rating agencies.
The prime minister’s strong leadership, the recent reforms and initiatives, and the RBI’s prudent monetary policies are building up confidence among investors.
While credit conditions are expected to remain tight for some time, improved business sentiment may drive up investment, which will likely be the growth engine in coming quarters. As said earlier, it takes time for an economy to reach a threshold where it can take off, and there are clear signs that energy is gradually building up.
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Agencies 2015-16
CSO 8-8.5%
ADB 7.8%
Crisil 6.0%
DBS 6.5%
S&P 7.9%
Goldman Sachs 6.3%
IMF 7.5%*
OECD 7.7%*
UN 5.9%*
World Bank 6.4%*
figures represent calendar year 2015
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PetrochemicalIndustry in India
SECTION 2
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Review of 2014-15 & Outlook for 2015-16
17
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Petrochemical Industry in India
Petrochemicals play a vital role in the functioning of virtually all key sectors of economy which includes agriculture, infrastructure, healthcare, textiles and consumer durables. Polymers provide critical inputs which enable other sector to grow. Petrochemical products cover the entire spectrum of daily use items ranging from clothing, housing, construction, furniture, automobiles, household items, toys, agriculture, horticulture, irrigation, and packaging to medical appliances.
Per capita consumption of polymer has reached saturation level in US. India has the advantage of high population and expected to maintain high economic growth. This should propel India’s polymer consumption to new levels in coming year.
Figure 15: Per capita Polymer Consumption Vs per capita GDP ~ 2013
Petrochemical Industry Review of 2014 & Outlook for 2015
Polymers
The sharp fall in crude oil prices cast a shadow on petrochemical markets across all regions in 2014. The final quarter of 2014 was especially difficult for petrochemical producers as buyers held back purchases and inventories had to be managed. The dramatic slump in petrochemical prices in the fourth quarter also had an impact on overall profitability for the year.
Cracker operators and derivative producers in the US had enjoyed very high margins in the first half of 2014 but saw their relative competitiveness eroded in the second half and particularly in the fourth quarter. US chemicals growth in 2014 was fairly robust, and industry economists remain positive for the sector in terms of output and demand. In Asia, the focus continues to be on China where a slowing economy has affected growth in petrochemical demand and this is expected to continue in 2015. (Source- ICIS)
The Indian domestic polymer industry (like global industry) is dominated by Polyolefin’s (PE & PP), representing about 73% of all commodity resins consumed in 2013-14. Polymers registered a demand growth of 1.3% in 2013-14 against modest growth of 9.3% in 2012-13. Domestic demand is expected to outpace domestic production.
Indian petrochemical industry has unrealized potential. Polymer demand is expected to grow by 7% in 2014-15 with a healthy growth in the relevant industries such as clothing, automobiles etc. Government and the industry players will have to work in tandem to achieve ambitious targets for the industry.
Taiwan
GDP Per Capita ($)
IndonesiaIndia
China
Thailand
0
10
20
30
40
50
60
70
80
90
100
0 10000 20000 30000 40000 50000 60000
Pe
r c
ap
ita
de
ma
nd
Kg
Malaysia
Korea
JapanWE
US
Singapore
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Petrochemicals industry got a taste of what could be a potential shift in petrochemical profitability during 2014 as crude prices – and, in turn, naphtha prices – tumbled
Given the historic lows in crude, and still falling, crude prices have impacted all petrochemical products, including PX, MEG and PTA, and PET/Polyester.
The new government's aim is to meet the expectations of the country's young and upwardly mobile consumers and improve the living standards of the large rural population.
The government has pledged to build 100 modern cities and to invest $1.0 trillion in infrastructure, including the construction of new ports and almost 20,000 kilometers (km) of roads. The government is also planning a high-speed rail network, including 25,000 km of new track; high-speed bullet trains; and hundreds of stations.
A particular boon for the plastics industry is the Swachha Bharat program, which calls for an end to open defecation by 2022. This will require constructing individual cluster and community toilets, cleaning up villages through solid and liquid waste management, and laying pipelines to connect all villages to water supplies by 2019.
Plastics producers estimate that this program could add 250,000 m.t./year to polymers demand at just 50% of the program's achievement.
The opportunities are huge, and the chemical industry stands to benefit in a big way. These proposals and “the focus to support the start-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 2015-16 than in the prior year, and key end-use industries like automotive, packaging, and consumer durables reflect this outlook.
After clocking a decent growth in 2012-13 the polymer growth in India was subdued at 1.3% in 2013-14 mainly because of economic slowdown and delays in infrastructure spending by the government.
The main drivers of polymer demand in India remain to be packaging, automobiles, construction, health care, etc. The packaging industry is estimated to be growing at an annual rate of more than 15% annually. Plastics raffia or the woven sack sector is dependent on end-use consumers for packaging applications viz. cement, fertilizers, food grains, sugar, sand etc.
Table 4: POLYMER Demand Supply
POLYMERS (KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
Capacity 8952 9049 9084 11404
Production 7949 8161 8426 10078
Op Rate (%) 89% 90% 93% 88%
Import 2816 2673 3319 2964
Exports 1073 1061 813 1131
Net Trade -1743 -1612 -2506 -1833
Demand 9234 9356 10007 11075
Demand Growth % 9.3% 1.3% 7.0% 10.7%
Source: Industry Estimates. A: Actual, E: Estimate
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Import dependency remained high at 29% in 2013-14 and is expected to come down in next two years to ~26%. PP exports was around 893 KT in 2013-14. PE imports in 2013-14 stood at 1109 KT and PVC imports were at 1026 KT in the same period. In 2013-14 net trade deficit of total polymers stood at 1612 KT. Trade deficit is expected to rise to 2506 KT in 2014-15 and come down to 1833 KT in 2015-16.
However, the demand for polymers is expected to grow at 7% in 2014-15 and see a double digit growth of 10.7% in 2015-16. India’s petrochemical 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 negative demand growth of 0.5% in 2013-14. It is expected that PE will see growth in demand to 7% in 2014-15 and again bounce back to clock a double digit growth of 10.7% in 2015-16. PP registered a demand growth of 4% in 2013-14 and growth is expected to witness a slow-down to touch 8% in 2014-15. Polyolefins registered demand growth of 2% in 2013-14. It is expected to improve to 8% in 2014-15 and 9% in 2015-16.
Table 5: POLYOLEFIN Demand in India Actual & Projected
(KT) Actual Projected % Change year on year
2012-13A 2013-14A 2014-15E 2015-16E 2013-14A 2014-15E 2015-16E
LDPE+EVA 559 575 649 704 2.9% 12.9% 8.4%
LLDPE 1240 1236 1345 1506 -0.3% 8.8% 12.0%
HDPE 1781 1766 1835 2022 -0.8% 3.9% 10.2%
PP 3142 3253 3515 3827 3.6% 8.0% 8.9%
Total PO 6721 6831 7344 8059 1.6% 7.5% 9.7%
Source: Industry Estimates. A: Actual, E: Estimate
ONGC Petro additions Ltd. (OPaL), a JV among ONGC, Gail, and Gujarat State Petroleum Corp., is building a
grassroots petrochemical complex at the Dahej PCPIR. The complex’s' ethylene plant will be a dual-feed cracker with
capacity for 1.1 million m.t./year of ethylene and 400,000 m.t./year of propylene. The downstream units will include two
360,000- m.t./year Swing PE units capable of producing high-density PE (I-IDPE) and/or LLDPE.
OPaL also is building a 340,000-m.t./year dedicated HOPE plant and a 340,000-m.t/year PP unit. The Dahej project,
which has been delayed by several years is expected to go on-stream in 2015.
MRPL is building a 440,000-m.t./year PP plant at the Mangalore SEZ in southwestern India and is also expected on-
stream in 2015.
Meanwhile in Assam State, in the far northeast of the country, Brahmaputra Cracker and Polymer Ltd. (BCPL),
70%.owned by Gail, is building a complex based around a 220,000- m.t./year ethylene and 60,000-m.t.lyear propylene
plant. The complex will also produce 226,000 m.t./year of LLDPE-HDPE and 60,000 m.t./year of PP.
Indian Oil is working on a number of investment projects. It broke ground recently on a PP project at Paradip that will be
designed co-produce 700,000 m.t./year. The plant, slated to be on-stream in 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.
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Vinyl’s: PVC
The demand for PVC increased substantially 2012-13 but was subdued in 2013-14 to 2%, however it is expected to gain in 2014-15 to 5.6% and touch a double digit 13.9% by 2015-16.
Table 6: PVC Demand Supply
PVC (KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
Capacity 1345 1402 1402 1482
Production 1201 1293 1263 1381
Imports 1048 1026 1152 1396
Exports 0 0 0 0
Apparent Demand 2263 2309 2438 2777
Demand Growth% 14.4% 2.0% 5.6% 13.9%
Source: Industry Estimates. A: Actual, E: Estimate
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.
Total capacity in 2013-14 was 1402 KT by adding Chemplast (emulsion grade) and DCW cPVC capacity of 30 KT and 121 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. PVC imports are expected to increase further to 1396 KT by 2015-16 from 1048 KT in 2012-13.
Styrenics
A. Polystyrene
In 2013-14, demand for PS witnessed a de-growth of negative (-) 13% to touch 217 KT, as shown in table below. Demand for Polystyrene is however expected to pick up in 2014-15 by 3.8% and further by 6.2% in 2015-16.
Table 7: POLYSTYRENE Demand Supply
POLYSTYRENE (KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
Capacity 472 472 472 472
Production 298 260 270 290
Imports 16 17 15 14
Exports 58 60 60 65
Apparent Demand 250 217 225 239
Demand Growth% 0.8% -13.3% 3.8% 6.2%
Source: Industry Estimates. A: Actual, E: Estimate
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B. Acrylonitrile-Butadiene-Styrene (ABS)
Demand for ABS registered a growth of 10.2% in 2013-14 however expected to see a slight dip to 9.9% in 2014-15. Industry capacity is expected rise in 2014-15 and touch 155 KT as Styrolution ABS Ltd and Bhansali Engineering Polymers Ltd. are expected to add capacity in that period and touch 190 KT by ‘16.
Table 8: ABS Demand Supply
ABS (KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
Capacity 131 131 155 190
Production 96 99 103 117
Imports 44 55 63 66
Exports 3 3 0 0
Apparent Demand 137 151 166 183
Demand Growth% 14.2% 10.2% 9.9% 10.2%
Source: Industry Estimates. A: Actual, E: Estimate
C. Styrene-Acrylonitrile (SAN)
Table 9: SAN Demand Supply
SAN (KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
Capacity 90 130 130 150
Production 78 82 87 98
Imports 5 7 7 8
Exports 0 0 0 0
Apparent Demand 83 89 94 106
Demand Growth% 2.5% 7.2% 5.6% 12.8%
Source: Industry Estimates. A: Actual, E: Estimate
Demand for SAN declined to 2.5% in 2012-13 and recovered to modest growth of 7.2% However, it is expected to grow at about 6% in 2014-15 and again see a jump in 2015-16 with capacity addition touching 150 KT in 2015-16. Imports are expected to rise in next two years.
Olefins (including Butadiene, Styrene, EDC & VCM)
A. Ethylene & Propylene
Ethylene Capacity increased from 3837 KT in 2010-11 to 3907 KT in 2012-13. It is further going to increase to 3687 KT by 2014-15 and 7057 KT by 2015-16. In 2013-14, production of ethylene and propylene was 3735 KT and 4150 KT respectively as shown in table below. Ethylene Production is expected to see a dip in 2014-15 with respect to slow down in production at Haldia plant. The capacity is however expected to touch 7057 KT 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) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
Capacity 3907 3907 3687 7057
Production 3744 3735 3756 6800
Imports 23 49 60 25
Exports 0 0 0 0
Net Availability 3767 3784 3816 6825
PROPYLENE (KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
Capacity 4141 4371 4255 5126
Production 3880 4150 4020 4650
Imports 0 0 0 0
Exports 6 0 10 10
Net Availability 3880 4150 4020 4650
Source: Industry Estimates. A: Actual, E: Estimate
Reliance Industries is constructing a 1.4-million m.t./year ethylene plant, expected on-stream in 2016 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 complex at the Dahej PCPIR. The complex’s' ethylene 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 increased from 4141 KT in 2012-13 to 4371 KT in 2013-14 and
expected to dip a bit in 2014-15 owing to slow down at Haldia plant. 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 4371 KT in 2013-14. Bharat Petroleum Corp. Ltd.'s
(BPCL) board earlier in 2014 approved a program to invest an estimated ₹45.9 billion to produce niche petrochemicals
at the company’s Kochi 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 touching a new low in FY15.The demand for butadiene registered a negative growth of -1.1% in 2012-
13. Demand is expected to register a growth of 43.4% in 2014-15 and 90% in 2015-16 on the back of new SBR and PBR
plants of RIL coming up. IOCL is adding 140 KT of Butadiene capacity in 2014-15 and OPAL is expected to add 58 KT in
2015-16 increasing it to 115 KT in 2016-17. Production is expected to increase in line with the new capacity addition
taking place and is expected to increase from 266 KT in 2010-11 to 374 KT by 2015-16.
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Table 11: BUTADIENE Demand Supply
BUTADIENE (KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
Capacity 295 295 435 493
Production 223 226 229 374
Imports 2 0 0 6
Exports 113 108 46 20
Apparent Demand 113 120 172 327
Demand Growth% -1.1% 6.3% 43.4% 90.3%
Source: Industry Estimates. A: Actual, E: Estimate
There was an exportable surplus of 113 KT in 2012-13, which declined to 108 KT in 2013-14 and expected to further decline to 46 KT in 2014-15 and 20 KT in 2015-16.
C. Styrene
India does not have any capacity for styrene and is fully dependent upon imports as shown in table below. For 2013-14, India’s total imports for Styrene was 572 KT and growth in styrene was at 3.8%. In 2014-15, imports for Styrene is projected to increase by 7.3% and expected to reach 614 KT & 647 KT in 2014-15 & 2015-16 respectively.
Table 12: STYRENE Demand Supply
STYRENE (KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
Imports 551 572 614 647
Exports 1 1 1 1
Apparent Demand 551 572 614 647
Demand Growth% 6.0% 3.8% 7.3% 5.4%
Source: Industry Estimates. A: Actual, E: Estimate
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.
Table 13: EDC & VCM Import into India
EDC (KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
Capacity 205 190 190 190
Production 187 180 180 180
Imports 451 472 541 541
Exports 0 0 0 0
Apparent Demand 638 652 721 721
Growth (%) 1.6% 2.2% 10.6% 0.0%
Source: Industry Estimates. A: Actual, E: Estimate
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(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
VCM
Capacity 856 906 906 981
Production 840 895 895 945
Imports 440 510 510 510
Exports 0 0 0 0
Apparent Demand 1280 1405 1405 1455
Demand Growth (%) 1.5% 9.8% 0.0% 3.6%
Source: Industry Estimates. A: Actual, E: Estimate
While EDC registered nominal growth of 2.2% in 2013-14, VCM witnessed a growth of 9.8% in the same period. However, EDC is expected to register a double digit growth of approx.10% in 2014-15. In case of import EDC witnessed a jump from 451 KT in 2012-13 to 472 KT in 2013-14 which is increase further to 541 KT in 2014-15. In case of VCM increased from 440KT in 2012-13 to 2013-14 and expected to remain same in 2014-15.
Fibre Intermediates
In 2013-14, the combined production of fibre intermediates viz. ACN, Caprolactam, PTA and MEG reached 4582 KT of which PTA and MEG constituted 75% and 23% respectively with ACN and Caprolactam together accounting for the remaining 3%.
Table 14 : FIBRE Intermediate Demand Supply
(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
ACN
Capacity 40 40 40 40
Production 33 37 39 39
Imports 82 110 126 131
Exports 2 0 0 0
Demand 115 147 154 160
Demand Growth (%) 1.8% 27.7% 4.8% 3.8%
CAPROLACTAM
Capacity 70 70 70 70
Production 83 85 87 89
Imports 10 11 13 15
Exports 0 0 0 0
Demand 93 96 100 104
Demand Growth (%) 9.0% 2.9% 4.0% 3.9%
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PTA
Capacity 3930 3930 3930 5652
Production 3462 3420 3700 5374
Imports 648 978 1015 0
Exports 4 0 0 231
Demand 4106 4398 4715 5143
Demand Growth (%) 6.6% 7.1% 7.2% 9.1%
MEG
Capacity 1300 1200 1200 1200
Production 1057 1040 960 1092
Imports 656 864 955 928
Exports 69 64 60 70
Demand 1644 1840 1855 1950
Demand Growth (%) 3.7% 11.9% 0.8% 5.1%
Source: Industry Estimates. A: Actual, E: Estimate
PTA and MEG constituted 50% and 44% of the total 1963 KT fibre intermediates imported in 2013-14. Fibre
intermediates exported from India in 2013-14 was 64 KT and is expected to jump to 301 KT in 2015-16 with the addition
of new capacity from RIL. ACN witnessed a robust growth of 27.7% in 2013-14 on the back of pesticide industry doing
well. 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 nil by 2015-16.
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 2013-14, GSFC produced ~85 KT of caprolactam; its sales accounted for 18% of total revenues.
Synthetic Fibres
In 2013-14, the combined production of synthetic fibre (PSF, ASF, PPSF, PFY, PPFY, VFY, VFS and NFY) reached
4034 KT against demand of 3866 KT. The demand growth was at 7.2% in 2013-14. It is expected that the fibre demand
growth will be ~5.6% by 2015-16. The capacity in the 2014-15 and 2015-16 is expected to increase to 6673 KT and 6789
KT respectively from 6597 KT in 2013-14. RIL commissioned its new Polyester Filament Yarn (PFY) facility at Silvassa,
from April 2014. The entire produce from this facility has been successfully placed in the domestic and international
markets.
With the commissioning of this ultra-modern Polyester Filament Yarn Facility, Reliance’s total PFY capacity, including
the Malaysian facilities, is in excess of 1.5 MMTPA. This expansion further strengthens RIL’s position as the world’s
largest producer of Polyester Fibre and Yarn.
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Table 15: Demand Supply Balance of Synthetic Fibre
(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 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 96 95 95
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 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%
Source: Industry Estimates. A: Actual, E: Estimate
Aromatics – Paraxylene
PX demand declined to 1.5% in 2013-14 from 5% in 2012-13. PX demand is expected to pick up again in 2014-15 and register a demand growth of 5.3% before growing at a robust space of 45.8% with lined up capacities. PX capacity in 2013-14 was 2472 KT and with MRPL capacity addition of 537 KT in 2014-15 it is expected to touch 3009 KT. Further 383 KT of capacity will be added in 2015-16 making it a total 920 KT by MRPL as planned and capacity addition by RIL will take India’s PX capacity to 5642 KT in 2015-16. PX import was at 679 KT in 2013-14 and it is expected to increase to 759 KT in 2015-16 meanwhile exports are expected to increase from 640 KT in 2013-14 to 1061 KT in 2014-15 before witnessing a dip in 2015-16 to 880 KT.
Table 16: PARAXYLENE Demand Supply
(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
PARAXYLENE
Capacity 2472 2472 3009 3673
Production 2326 2259 2807 3443
Imports 550 679 699 759
Exports 595 640 1061 880
Apparent Demand 2263 2298 2419 3528
Demand Growth% 5.1% 1.5% 5.3% 45.8%
Source: Industry Estimates. A: Actual, E: Estimate
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Reliance is adding 2.3 million m.t./year of p-xylene capacity to its existing Capacity. It also operates a small, 150,000 m.t./year p xylene plant at Patalganga, Maharashtra State. Reliance will, on completion, have capacity for 4.3 million m.t./year of p-xylene by 2016-17. 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 1.8% and 3.3% respectively in 2013-14 from 2014-15 before improving by 3.3% in 2014-15 as shown in table below. LAB capacity is expected to remain unchanged till 2015-16.
LAB import is expected to decline marginally to 120 KT in 2014-15 from 126 KT in 2013-14. Exports are also expected to decline from 29 KT in 2013-14 to 24 KT in 2014-15.
Table 17: Demand & Supply of LAB & EO
(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
LAB
Capacity 530 530 530 530
Production 445 404 422 443
Imports 122 126 120 124
Exports 55 29 24 26
Demand 500 509 526 544
Demand Growth (%) 6.3% 1.8% 3.3% 3.5%
EO
Capacity 208 234 253 268
Production 172 190 193 203
Imports 0 0 0 0
Exports 0 0 0 0
Demand 172 190 193 203
Demand Growth (%) 2.7% 10.9% 1.2% 5.5%
Source: Industry Estimates. A: Actual, E: Estimate
EO capacity increased from 234 KT in 2013-14 to 253 KT in 2014-15 and further is expected to touch 268 KT in 2015-16. Debottlenecking of EO capacity by RIL in 2012-13 happened and further debottlenecking expected in 2014-15. RIL capacity would also be enhanced to 188 KT in 2014-15 and 203 KT in 2015-16. Demand for EO grew by 10% in 2013-14 however it is expected to see a decline and grow at by 1.2% in 2014-15 before recovering to 5.5% and touch 203 KT in 2015-16.
Synthetic Rubber
SBR which accounts for 40% of the total synthetic rubber demand is consumed mostly in the tyre sector. In 2013-14, synthetic rubber demand grew at 7% and is expected to grow at 8% in 2014-15. Reliance Industries Ltd. began production at its new 150,000 mt/year SBR plant at Hazira in September, 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 above, SBR demand registered a growth of 6.7% in 2013-14 and expected to improve in 2014-15. Imports are expected to significantly reduce in 2015-16 onwards with RIL and ISRL new capacities coming up to full steam. EPDM demand is expected to improve by 2015-16 to a double digit growth of 13.5%.
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India is a net importer of SBR and with RIL’s new capacity, India will be self-sufficient in SBR. With this, RIL has reaffirmed its leadership position in synthetic rubbers in the Indian market. After start-up of new PBR capacity at Hazira, RIL is expected to increase its domestic market share as substantial portion of production from new line will be placed in the domestic market.
Table 18: Demand Supply Balance of PBR, SBR, NBR & EPDM
(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
PBR
Capacity 74 85 114 124
Production 74 85 114 130
Imports 94 96 82.5 81
Exports 1 1 2 2
Demand 168 180 195 209
Demand Growth (%) 8.3% 7.5% 8.1% 7.5%
SBR
Capacity 20 50 220 290
Production 20 50 70 290
Imports 221 220 217 54
Exports 4 15 10 50
Demand 239 255 277 294
Demand Growth (%) 21.3% 6.7% 8.6% 6.1%
NBR
Capacity 20 20 20 20
Production 20 20 20 20
Imports 15 18 21 25
Exports 0 0 0 0
Demand 35 38 41 45
Demand Growth (%) 12.9% 8.6% 7.9% 9.8%
EPDM
Capacity 10 10 10 10
Production 0 0 0 0
Imports 32 35 37 42
Exports 0 0 0 0
Demand 32 35 37 42
Demand Growth (%) 15.7% 8.0% 5.7% 13.5%
Source: Industry Estimates. A: Actual, E: Estimate
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Reliance is the only producer of PBR in India. Indian Oil is also expected to start a third SBR line with a capacity of 60,000 m.t./year at Panipat. 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.
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.
Table 19: Demand Supply Balance of CBFS & Carbon Black
(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
CBSF
Capacity 1595 1925 1925 2005
Production 1595 1450 1525 1610
Imports 1000 800 860 900
Exports 1050 800 480 500
Demand 1545 1450 1525 1610
Demand Growth (%) 10.4% -6.1% 5.2% 5.6%
CARBON BLACK (KT)
Capacity 1027 1040 1040 1080
Production 840 780 825 870
Imports 128 100 70 80
Exports 170 120 90 100
Demand 798 880 895 950
Demand Growth (%) 17.0% 10.3% 1.7% 6.1%
Source: Industry Estimates. A: Actual, E: Estimate
The domestic carbon black industry continues 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 will affect the demand growth to drop to 1.7% from 10% in 2013-14. Total import of carbon black in India during FY14 was 100 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. Demand for carbon black in India is expected to grow @ 6-11% during the next couple of years and is likely to receive significant boost when new capacity for tyre manufacturing hits the market. CBFS registered a negative growth by -6.1% in 2013-14 and is expected to improve and remain in the range of 5% in next two years.
Other Key Petrochemicals
Overall other key petrochemicals demand in 2013-14 witnessed negative growth of 3.9% and is expected to pick up by 2015-16 to a positive 7%. Benzene demand witnessed a negative growth of 4.4% in 2013-14 however is expected to grow at ~12% in 2015-16 (before a further decline in 2014-15) with capacity addition lined up by OPAL, MRPL, IOCL, BPCL, HPL, and boost in domestic sales. Exports too are expected to pick up by 2015-16.
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Table 20: Demand Supply Balance of Benzene, Toluene, MXS & OX
(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
BENZENE
Capacity 1260 1092 1083 1628
Production 1146 1062 1049 1310
Imports 48 0 0 0
Exports 601 495 579 780
Demand 593 567 470 530
Demand Growth (%) -2.1% -4.4% -17.1% 12.8%
TOLUENE
Capacity 270 270 270 270
Production 140 140 140 140
Imports 307 264 300 320
Exports 0 0 0 0
Demand 447 404 440 460
Demand Growth (%) 16.1% -9.6% 8.9% 4.5%
MXS
Capacity 90 90 90 90
Production 77 86 81 86
Imports 31 34 65 73
Exports 22 18 18 18
Demand 83 100 126 140
Demand Growth (%) -2.8% 20.5% 26.0% 11.1%
OX
Capacity 420 420 420 420
Production 444 412 461 460
Imports 50 65 36 25
Exports 213 205 213 200
Demand 281 278 286 285
Demand Growth (%) 5.8% -1.1% 2.9% -0.3%
Source: Industry Estimates. A: Actual, E: Estimate
Toluene demand registered growth of 16% in 2012-13. Toluene demand registered a negative growth of 9.6% in 2013-14 but forecasted to improve by 8.9% in 2014-15. MXS witnessed a robust growth in demand at 20.5% in 2013-14 with increase in production and domestic sales. OX registered a negative growth rate of 1.1% in 2013-14. There is no new capacity addition lined up for OX. Demand is expected to increase from 278 KT in 2013-14 to 285 KT in 2015-16.
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Outlook for the Overall Indian Petrochemical Industry
India's aggregated demand for petrochemicals increased by 4% in 2013-14 over 2012-13. 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 30 MMT in 2013-14 to 31 MMT in 2014-15 and further to 35 MMT in 2015-16 as depicted in figure below. At the aggregate level, therefore, demand for petrochemicals in India is expected to grow at 6% and 10% per annum in 2014-15 and 2015-16 respectively.
Figure 16 : Aggregate Petrochemical Demand (All key segments – MMT)
n Polymers are likely to register growth rate of 6.7% and 9.3% in 2014-15 and 2015-16.
n Polyolefins are expected to grow at 7.2% and 7.9% in 2014-15 and 2015-16 with the startup of new capacities.
n Surfactants are projected to grow at ~5% and 9% in the same period. Synthetic rubbers are expected to register demand growth in the range of 7% in next two years.
n Other key petrochemicals expected to grow at ~7% in 2015-16. India's demand from the automobiles, packaging, and agriculture and infrastructure sector is expected to grow at healthy rate with easing of government's monetary policy.
This optimism is based on the expectation that India's GDP would again grow at 7% plus in 2014-15.
0%
2%
4%
6%
8%
10%
MM
T
36
35
34
33
32
31
30
29
28
27
4%
6%
10%
30
31
35
Demand (MMT) Demand Growth (%)
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2013-14 2014-15E 2015-16E
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Statistical Appendix
SECTION 3
Asia Petrochemical Industry Conference
STATISTICAL APPENDIXSTATISTICAL APPENDIX
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Demand Supply Balance: Polymers (KT)
(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
LDPE
Capacity 205 205 205 205
Production 186 190 185 207
Imports 257 255 321 345
Exports 0 0 0 0
Apparent Demand 443 444 507 552
Demand Growth% -8.4% 0.2% 14.0% 8.9%
EVA
Capacity 15 15 15 15
Production 11 11 8 12
Imports 105 120 135 140
Exports 0 0 0 0
Apparent Demand 116 131 143 152
Demand Growth% 18.0% 13.0% 8.9% 6.7%
LLDPE
Capacity 980 980 980 1650
Production 770 794 745 1242
Imports 520 450 610 360
Exports 10 9 7 86
Apparent Demand 1240 1236 1345 1506
Demand Growth% 4.8% -0.3% 8.8% 12.0%
HDPE
HDPE Capacity 1795 1795 1830 2810
LLDPE Capacity 980 980 980 1650
Total Capacity 2775 2775 2810 4460
Production 1501 1425 1264 2049
Imports 440 404 569 330
Exports 160 99 25 341
Apparent Demand 1781 1766 1835 2022
Demand Growth% 7.2% -0.8% 3.9% 10.2%
All PE
Capacity 2980 2980 3015 4665
Production 2457 2409 2194 3498
Imports 1217 1109 1500 1035
Exports 170 108 33 427
Apparent Demand 3464 3446 3687 4080
Demand Growth% 4.1% -0.5% 7.0% 10.7%Source: Industry Estimates. A: Actual, E: Estimate
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PP
Capacity 4140 4180 4180 4770
Production 3982 4188 4692 4897
Imports 430 400 517 379
Exports 845 893 720 639
Apparent Demand 3142 3253 3515 3827
Demand Growth% 12.5% 3.6% 8.0% 8.9%
POLYOLEFINS
Capacity 7135 7175 7210 9450
Production 6450 6608 6893 8407
Imports 1752 1630 2152 1554
Exports 1015 1001 753 1066
Apparent Demand 6721 6831 7344 8059
Demand Growth% 8.1% 1.6% 7.5% 9.7%
PVC
Capacity 1345 1402 1402 1482
Production 1201 1293 1263 1381
Imports 1048 1026 1152 1396
Exports
Apparent Demand 2263 2309 2438 2777
Demand Growth% 14.4% 2.0% 5.6% 13.9%
PS
Capacity 472 472 472 472
Production 298 260 270 290
Imports 16 17 15 14
Exports 58 60 60 65
Apparent Demand 250 217 225 239
Demand Growth% 0.8% -13.3% 3.8% 6.2%
POLYMERS
Capacity 8952 9049 9084 11404
Production 7949 8161 8426 10078
OR (%) 89% 90% 93% 88%
Imports 2816 2673 3319 2964
Exports 1073 1061 813 1131
Net Trade -1743 -1612 -2506 -1833
Apparent Demand 9234 9356 10007 11075
Demand Growth% 9.3% 1.3% 7.0% 10.7Source: Industry Estimates. A: Actual, E: Estimate
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Demand Supply Balance: Olefins (KT)
(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
ETHYLENE
Capacity 3907 3907 3687 7057
Production 3744 3735 3756 6800
Imports 23 49 60 25
Exports 0 0 0 0
Net Availability 3767 3784 3816 6825
PROPYLENE
Capacity 4141 4371 4255 5126
Production 3880 4150 4020 4650
Imports 0 0 0 0
Exports 6 0 10 10
Net Availability 3880 4150 4020 4650
BUTADIENE
Capacity 295 295 435 493
Production 223 226 229 374
Imports 2 0 0 6
Exports 113 108 46 20
Apparent Demand 113 120 172 327
Demand Growth% -1.1% 6.3% 43.4% 90.3%
STYRENE
Imports 551 572 614 647
Exports 1 1 1 1
Net Trade 551 572 614 647
Demand Growth% 6.0% 3.8% 7.3% 5.4%
EDC
Capacity 205 190 190 190
Production 187 180 180 180
Imports 451 472 541 541
Exports 0 0 0 0
Apparent Demand 638 652 721 721
Demand Growth% 1.6% 2.2% 10.6% 0.0%
VCM
Capacity 856 906 906 981
Production 840 895 895 945
Imports 440 510 510 510
Exports 0 0 0 0
Apparent Demand 1280 1405 1405 1455
Demand Growth% 1.5% 9.8% 0.0% 3.6%Source: Industry Estimates. A: Actual, E: Estimate
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Demand Supply Balance: ABS, SAN, PX & Surfactants (KT)
(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
ABS
Capacity 131 131 155 190
Production 96 99 103 117
Imports 44 55 63 66
Exports 3 3 0 0
Apparent Demand 137 151 166 183
Demand Growth% 14.2% 10.2% 9.9% 10.2%
SAN
Capacity 90 130 130 150
Production 78 82 87 98
Imports 5 7 7 8
Exports 0 0 0 0
Apparent Demand 83 89 94 106
Demand Growth% 2.5% 7.2% 5.6% 12.8%
PX
Capacity 2472 2472 3009 3673
Production 2326 2259 2807 3443
Imports 550 679 699 759
Exports 595 640 1061 880
Apparent Demand 2263 2298 2419 3528
Demand Growth% 5.1% 1.5% 5.3% 45.8%
LAB
Capacity 530 530 530 530
Production 445 404 422 443
Imports 122 126 120 124
Exports 55 29 24 26
Apparent Demand 500 509 526 544
Demand Growth% 6.3% 1.8% 3.3% 3.5%
EO
Capacity 208 234 253 268
Production 172 190 193 203
Imports 0 0 0 0
Exports 0 0 0 0
Apparent Demand 172 190 193 203
Demand Growth% 2.7% 10.9% 1.2% 5.5%Source: Industry Estimates. A: Actual, E: Estimate
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Demand Supply Balance: Fibre Intermediates (KT)
(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
ACN
Capacity 40 40 40 40
Production 33 37 39 39
Imports 82 110 126 131
Exports 2 0 0 0
Apparent Demand 115 147 154 160
Demand Growth% 1.8% 27.7% 4.8% 3.8%
CAPROLACTAM
Capacity 70 70 70 70
Production 83 85 87 89
Imports 10 11 13 15
Exports 0 0 0 0
Apparent Demand 93 96 100 104
Demand Growth% 9.0% 2.9% 4.0% 3.9%
PTA
Capacity 3930 3930 3930 5652
Production 3462 3420 3700 5374
Imports 648 978 1015 0
Exports 4 0 0 231
Apparent Demand 4106 4398 4715 5143
Demand Growth% 6.6% 7.1% 7.2% 9.1%
MEG
Capacity 1300 1200 1200 1200
Production 1057 1040 960 1092
Imports 656 864 955 928
Exports 69 64 60 70
Apparent Demand 1644 1840 1855 1950
Demand Growth% 3.7% 11.9% 0.8% 5.1%
Source: Industry Estimates. A: Actual, E: Estimate
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Demand Supply Balance: Synthetic Fibres (KT)
(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 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 74 96 95 95
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%
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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%
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%
Source: Industry Estimates. A: Actual, E: Estimate
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Demand Supply Balance: Elastomers (KT)
(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
PBR
Capacity 74 85 114 124
Production 74 85 114 130
Imports 94 96 82 81
Exports 1 1 2 2
Apparent Demand 168 180 195 209
Demand Growth% 8.3% 7.5% 8.1% 7.5%
SBR
Capacity 20 50 220 290
Production 20 50 70 290
Imports 221 220 217 54
Exports 4 15 10 50
Apparent Demand 239 255 277 294
Demand Growth% 21.3% 6.7% 8.6% 6.1%
NBR
Capacity 20 20 20 20
Production 20 20 20 20
Imports 15 18 21 25
Exports 0 0 0 0
Apparent Demand 35 38 41 45
Demand Growth% 12.9% 8.6% 7.9% 9.8%
EPDM
Capacity 10 10 10 10
Production 0 0 0 0
Imports 32 35 37 42
Exports 0 0 0 0
Apparent Demand 32 35 37 42
Demand Growth% 15.7% 8.0% 5.7% 13.5%
Source: Industry Estimates. A: Actual, E: Estimate
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Demand Supply Balance: Other Key Petrochemicals (KT)
(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
BENZENE
Capacity 1260 1092 1083 1628
Production 1146 1062 1049 1310
Imports 48 0 0 0
Exports 601 495 579 780
Apparent Demand 593 567 470 530
Demand Growth% -2.1% -4.4% -17.1% 12.8%
TOLUENE
Capacity 270 270 270 270
Production 140 140 140 140
Imports 307 264 300 320
Exports 0 0 0 0
Apparent Demand 447 404 440 460
Demand Growth% 16.1% -9.6% 8.9% 4.5%
Demand Supply Balance: Carbon Black & CBFS (KT)
(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E
CBFS
Capacity 1595 1925 1925 2005
Production 1595 1450 1525 1610
Imports 1000 800 860 900
Exports 1050 800 480 500
Demand 1545 1450 1525 1610
Demand Growth (%) 10.4% -6.1% 5.2% 5.6%
CARBON BLACK
Capacity 1027 1040 1040 1080
Production 840 780 825 870
Imports 128 100 70 80
Exports 170 120 90 100
Demand 798 880 895 950
Demand Growth (%) 17.0% 10.3% 1.7% 6.1%
Source: Industry Estimates. A: Actual, E: Estimate
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MX
Capacity 90 90 90 90
Production 77 86 81 86
Imports 31 34 65 73
Exports 22 18 18 18
Apparent Demand 83 100 126 140
Demand Growth% -2.8% 20.5% 26.0% 11.1%
OX
Capacity 420 420 420 420
Production 444 412 461 460
Imports 50 65 36 25
Exports 213 205 213 200
Apparent Demand 281 278 286 285
Demand Growth% 5.8% -1.1% 2.9% -0.3%
Source: Industry Estimates. A: Actual, E: Estimate
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Presentations for Committee MeetingsAPIC-2015
INDIAN COUNTRY REPORT
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REVIEW & OUTLOOK OF
INDIAN ECONOMY
Review & Future ProspectsMay 2015
INDIAN PETROCHEMICAL INDUSTRY
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Single most positive factor for India Stable Govt & Stable policies
A Govt of majority after 30 years
GDP growth showing signs of recovery
Ÿ GDP Revised Series with 2011-12 as base yearŸ India’s economic growth this financial year at 7.4% against 6.9% in 2013-14Ÿ IMF, ADB and OCED have revised their growth projections for 2015-16
Sou
rce:
CSO
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Manufacturing sector GDP revisions have been substantial, and need to be noted
As per the revised data manufacturing has grown more than 5% over past two years and now makes up nearly 18% of output
GDP Shows 5.3% Growth in Manufacturing in 2013-14
Agriculture & Allied
Mining & Quarrying
Manufacturing
Electricity, Gas and Water
Construction
Trade, Repair and restaurants
Transport, Storage, Communication
Financial, Real estate & business Services
Community, Social & Personal Services
Total GVA
3.74.7
5.4-1.4
-0.75.9
4.82.5
1.613.3
1.07.3
6.17.9
12.9
7.95.6
6.64.7
-4 -2 0 -2 4 6 8 10 12 14
Source: CSO
2011-12 series 2004-05 series
Growth in 2013-14 at constant prices (%)
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IIP strengthened 2.5% for the period of April to January 2015Although there are small positive changes in IIP, heavy positive changes are expected due to key
reforms under approval and increasing investment in infrastructure
Index of Industrial Production four out of nine components ( %)
IIP Gearing Toward The Right And Positive Direction
2008
-09
2009
-10
2010
-11
2011
-12
2012
-13
2013
-14
2014
-15
(Ap
r-Ja
n)
IIP-General (%)
2.5
5.3
8.2
2.9
1.1
-1.1
2.5
Ap
r-13
May-1
3
Ju
n-1
3
Ju
l-13
Au
g-1
3
Sep
-13
Oct-
13
No
v-1
3
Dec-1
3
Jan
-14
Feb
-14
Mar-
14
Ap
r-14
May-1
4
Ju
n-1
4
Ju
l-14
Au
g-1
4
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan
-15
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
4.2%
2.7%
IIP Overall IIP Mining IIP Manufacturing IIP Electricity IIP Basic Goods
Source: CSO
Source: CSO
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Total production growth (%) in core infrastructure commodities
Eight core infrastructure industries reported a growth of 4.1% during Apr-Jan’15The highest growth was reported by Electricity 8.9% and Coal 8.1%These eight industries contribute ~38% to the industrial production
Production growth (%) in eight core infrastructure commodities
Core sector growth in Jan’15 was 1.8%A
pr-
13
May-1
3
Ju
n-1
3
Ju
l-13
Au
g-1
3
Sep
-13
Oct-
13
No
v-1
3
Dec-1
3
Jan
-14
Feb
-14
Mar-
14
Ap
r-14
May-1
4
Ju
n-1
4
Ju
l-14
Au
g-1
4
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan
-15
25.0
20.0
15.0
10.0
5.0
0.0
-5.0
-10.0
-15.0
-20.0
-25.0
Growth of Coal(%)
Growth of Natural Gas(%)
Growth of Fertilizers(%)
Growth of Cement(%)
Growth of Crude Oil(%)
Growth of Petroleum Refinery Products(%)
Growth of Steel
Growth of Electricity(%)
2008
-09
2009
-10
2010
-11
2011
-12
2012
-13
2013
-14
2014
-15
(Ap
r-Ja
n)
Jan
'14
Jan
' 15
2.8
6.6 6.6
5.0
6.5
3.9 4.13.7
1.8
Source: CSO
Source: CSO
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Improving Trade Balance
Export - import and trade balance (USD Billion)
185 179251
306 300 313304 288370
489 491 450
-118 -110
-119
-183 - 190
-137
-250
-200
-150
-100
-50
00
100
200
300
400
500
600
FY09 FY10 FY11 FY12 FY13 FY14
Exports Imports Trade balance (RHS)
Oil and non - oil imports (USD Billion)
94 87 106155 164 165
210 201264
334 327 285
FY09 FY10 FY11 FY12 FY13 FY14
Oil imports Non-Oil imports
India’s trade balance reached a negative USD190 billion in FY13, which improved 27.8% to a negative USD137 billion in FY14
Source: Monthly Economic Report, Ministry of Finance
Source: Monthly Economic Report, Ministry of Finance
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Inflation shows a sustainable decline
Going ahead, inflation expected to print at Sub 6% in 2015-16; if the outlook on crude oil remains benign, monsoon is normal, and there are proactive measures by the government to
control food inflation and improve monetary and fiscal coordination;
RBI expects inflation to come around the target level of 6% for January 2016
5.03
-0.39
-2.06
-0.66
7.748.32
WPI WPI Food
Jan
-14
Feb
-14
Mar-
14
Ap
r-14
May-1
4
Ju
n-1
4
Ju
l-14
Au
g-1
4
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan
-14
Feb
15
9.668.88
4.62
8.60
6.77
2.04
4.39
5.37
6.76
Jan
-14
Feb
-14
Mar-
14
Ap
r-14
May-1
4
Ju
n-1
4
Ju
l-14
Au
g-1
4
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan
-14
Feb
15
CPI CPI Food
Source: Monthly Economic Report, Ministry of Finance
Source: Monthly Economic Report, Ministry of Finance
Figures in %
Figures in %
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Sensex witnessed a consistent rise in 2014 with a growth of around 40%
Sensex is expected to scale new highs in the year 2015
The rupee’s performance compares very favourably with currencies such as the Brazilian Real (down 12.3%), Turkish Lira (down 9.7%) and the Indonesian Rupiah (down 4.5%)
Indian rupee has been ranked as one of the best performers in 2014
Ja
n-1
4
Fe
b-1
4
Ma
r-1
4
Ap
r-1
4
Ma
y-1
4
Ju
n-1
4
Ju
l-1
4
Au
g-1
4
Se
p-1
4
Oc
t-1
4
No
v-1
4
De
c-1
4
Ja
n-1
5
Fe
b-1
5
63.0
61.0
59.0
62.1 62.1
60.960.83
59.26
61.7
62.7562.01
Rupee Movement
Source : BSE
31000
29000
27000
25000
23000
21000
19000
17000
15000
19623
Note : Sensex values denote the high of the day and data for March'15 till 4th March'15
Touched all time high on 4th March'1530025
Movement of Sensex (Apr'13-Mar'15)
Ap
r-1
3
Ma
y-1
3
Ju
n-1
3
Ju
l-1
3
Au
g-1
3
Se
p-1
3
Oc
t-1
3
No
v-1
3
De
c-1
3
Ja
n-1
4
Fe
b-1
4
Ma
r-1
4
Ap
r-1
4
Ma
y-1
4
Ju
n-1
4
Ju
l-1
4
Au
g-1
4
Se
p-1
4
Oc
t-1
4
No
v-1
4
De
c-1
4
Ja
n-1
5
Fe
b-1
5
Ma
r-1
5
Source : RBI
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India's foreign exchange reserves crossed US$ 330 bn as on Feb 6th, 2015
Foreign exchange reserve registered a new high
CAD falls to 1.6% of GDP in Q3
CAD is expected to CAD below 1% of GDP in 2015-16
CAD in last Nine Quarters (%)6.5
3.6
4.8
1.20.9
0.2
1.72.1
1.6
Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15
340
330
320
310
300
290
US$ bn
07
-Fe
b-2
01
4
28
-Fe
b-2
01
4
21
-Ma
r-2
01
4
11
-Ap
r-2
01
4
02
-Ma
y2
01
4
23
-ma
y-2
01
4
13
-Ju
n-2
01
4
04
-Ju
l-2
01
4
25
-Ju
l-2
01
4
15
-Au
g-2
01
4
05
-Se
p-2
01
4
26
-Se
p-2
01
4
17
-Oc
t-2
01
4
07
-No
v-2
01
4
28
-No
v-2
01
4
19
-De
c-2
01
4
09
-Ja
n-2
01
5
30
-Ja
n-2
01
5
Source : RBI
Source : CSO
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Budget plans 25% increase in capital expenditure
%,
y-o-y
Roads &Bridges Rural
Development
Railways Power
FY 12 to FY 15 average FY 16 B.E.174.5
66.553.0
15.5
-10.6-30.6
Source: Budget 2015-16
Sectors with higher plan outlay (%, y-o-y)
Ÿ Central plan outlay is budgeted to increase by 35.5% in 2015-16
Ÿ Budget lays focus on four sectors providing crucial
Ÿ Focus on these sectors is important again because of the multiplier impact on output
25 thrust sectors identified where India can become leader including
Ÿ Chemicals
Ÿ Automobiles
Ÿ Pharma
Ÿ Textiles
Ÿ IT
Ÿ Ports
Ÿ Railways
Ÿ Aviation
Ÿ Food processing
Ÿ Electronics
Will give boost to share of manufacturing in GDP
Leading to higher growth, higher exports and job creation
3000 companies invited to explore investment opportunities
Make in IndiaA major new national program designed to transform India into a global manufacturing hub
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Ÿ These cities will have 0.5 to 1.0 million residents over next 10-15 years.
Ÿ Opportunities for Real Estate/Cement /Pipes/IT & Electronics/Telecom/Roads/Water & Sanitation / Power / Transportation
Ÿ Example – Kochi Smart City/Gujarat International Finance Tech City
100 Smart Cities Opportunity not to be missed
Expected GDP growth rate in 2015-16 ~ 6.6-7.5%
India’s GDP growth projections
*figures represent calendar year 2015
Agencies 2015-16
CSO
ADB
Crisil
DBS
S&P
Goldman Sachs
IMF
OECD
UN
8-8.5%
7.8%
6.0%
6.5%
7.9%
6.3%
7.5%*
7.7%*
5.9%*
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REVIEW & OUTLOOK OF PETROCHEMICAL INDUSTRY
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Capacity for polymers to go up significantly by ‘16
Capacity addition of 330 KT PP by MRPL, 170 KT by OPAL,
30 KT by BPCL-Assam and 60 KT by RIL in 2015-16
Demand for PE & PP is expected to register growth of 7% and 8% in 2014-15
Polymer demand grew at 1.3% in 2013-14
3.0 3.0 3.04.7
4.1 4.2 4.2
4.81.3 1.4 1.4
1.5
0.5 0.5 0.5
0.5
0
2
4
6
8
10
12
14
2012 -13 A 2013 -14 A 2014 -15 E 2015 -16 E
PS PVC PP All PEs
MMT
8.9
Total
9.09.1
11.4
Source: Industry Estimates. A: Actual, E: Estimate
3.5 3.4 3.7 4.1
3.1 3.33.5
3.8
2.3 2.32.4
2.80.3 0.20.2
0.2
0
2
4
6
8
10
12
2012-13 A 2013-14 A 2014-15 E 2015-16 E
PS PVC PP All PEs
Source: Industry Estimates. A: Actual, E: Estimate
MMT
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Trend in Polymers net trade (mmt)
Net exportable surplus : PP
Petrochemical demand continuously growingAggregate petrochemicals demand combining all the key sector (mmt)
….and is expected to touch 35 mmt by 2015-16
-1.00
-1.47
-0.61
0.49
0.20 0.26
-1.0 -1.2-1.4
0.04 0.05 0.05
2013 -14 A 2014 -15 E 2015 -16 E
All PE PP PVC PS
Source: Industry Estimates. A: Actual, E: Estimate
MMT
Source: Industry Estimates. A: Actual, E: Estimate
30 31
35
0
5
10
15
20
25
30
35
40
2013-14A 2014-15E 2015-16E
MMT
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(in KTs) Start up Year C2 C3 HDPE LDPE LLDPE PP PVC
BCPL 15-16 220 60 155 65 60
GAIL 14-15 450 210 260
OPAL 16-17 1100 340 720 340 340 (15-16)
RIL 16-17 1400 170 200 400 350
MRPL 15-16 440 440
BPCL 16-17 500
Total Till 16-17 3170 1510 1285 400 1015 840
Source: Industry
The domestic petrochemical industry is in the process of investing
over ~US$25 billion to meet the surging demand
Planned new capacities in India
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INDIAN POLYOLEFINS INDUSTRY
REVIEW OF POLYOLEFINS SECTOR
Review & Future ProspectsMay 2015
Asia Petrochemical Industry ConferenceINDIAN PETROCHEMICAL INDUSTRY
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Expected to register a healthy growth of 8% and 10% in 2014-15 and 2015-16
Polyolefins demand grew at ~2% in 2013-14
PE & PP demand grew at -0.5% and 4% respectively in 2013-14; expected to show healthy growth trend in next two years
Demand of Polyolefins in 2013-14
6.726.83
7.32
8.05
2012-13 A 2013-14 A 2014-15 E 2015-16 E
MMT
Source: Industry Estimates. A: Actual, E: Estimate
Source: Industry Estimates. A: Actual, E: Estimate
3.46 3.45
3.69
4.08LLDPE+HDPE+LDPE
3.14 3.253.52
3.83Polypropylene
2012-13A
2013-14A
2014-15E
2012-13A
2013-14 A
2014-15E
2015-16E
2015-16E
MMT MMT
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Polyolefin production increased by ~2.5% in 2013-14
Polyolefin consumption is dominated by Lin PE & PP demand
PE & PP Demand Trend
Line PE and PP demand growth expected to rise from 2014-15 onwards
0.6 0.6 0.6 0.7
3.0 3.03.2
3.5
3.1 3.33.5
3.8
2012-13 A 2013-14 A 2014-15 E 2015-16 E
LDPE+EVA Lin PE PP
MMT
Source: Industry Estimates. A: Actual, E: Estimate
Polyolefin Production - 6.6 MMT Polyolefin Demand - 6.8 MMT
LDPE+EVA3%
LLD/HD34%
PP63%
LDPE+EVA
8%
LLD/HD44%
PP48%
Figures in %
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-0.36 -0.37-0.46 -0.48
-0.79 -0.75
-1.15
-0.26
0.420.49
0.20 0.26
2012 -13 A 2013 -14 A 2014 -15 E 2015 -16 E
LDPE+EVA LLD+HDPE PP
Polyolefins net trade deficit was 0.63 MMT in 2013-14
LLD + HDPE registered net trade deficit of 0.74 MMT and
PP registered trade surplus of 0.49 MMT in 2013-14
Source: Industry Estimates. A: Actual, E: Estimate
MMT
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OUTLOOK FOR POLYOLEFINS SECTOR
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Projected demand for Polyolefins in India
Healthy demand growth expected for polyolefins in next two years
2012-13 2013-14
LDPE+EVA 559 575
LLDPE 1240 1236
HDPE 1781 1766
PP 3142 3253
PE import dependency to remain same
Net exportable surplus for PP expected to increase with new capacities coming on stream in 2015-16
(KTA) Actual
Polyolefins 6721 6831 1.6% 7.5% 9.7%7344 8059
2013-14 2014-15 2015-16
2.9% 12.9% 8.4%
0.3% 8.8% 12.0%
0.8% 3.9% 10.2%
3.6% 8.0% 8.9%
2014-15 2015-16
649 704
1345 1506 -
1835 2022 -
3515 3827
% change Y-o-YProjected
69%
70%
65%
20%
37%
28%
10%
15%
12%
2015-16 E
2014-15 E
2013-14 A
LDPE+EVA LLD+HDPE PP
Fig
ure
s in
%
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VINYLS IN INDIA
REVIEW OF VINYL SECTOR
Review & Future ProspectsMay 2015
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PVC witnessed a growth of 2% in 2013-14
Demand has gone up from 1979 KT in 2011-12 to 2309 KT in 2013-14
PVC Capacity addition in 2015-16
2013-14 saw capacity addition by DCW in cPVC and by RIL by debottlenecking; Capacity addition is expected by RIL in 2015-16
1979
22632309
2438
2777
2011-12A 2012-13A 2013-14 A 2014-15 E 2015-16 E
PVC Apparent Demand
KT
Source: Industry Estimates. A: Actual, E: Estimate
1335 13451402 1402
1482
2011-12 A 2012-13 A 2013-14 A 2014-15 E 2015-16 E
PVC Capacity
KT
Source: Industry Estimates. A: Actual, E: Estimate
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Net trade of EDC & VCM
Imports dependency remained high
PVC deficit has increased from 644 KT in 2011-12 to 919 KT in 2013-14
PVC demand supply balance in India
Source: Industry Estimates. A: Actual, E: Estimate
-332
-451-472
-411-440
-510
2011-12 A 2012-13 A 2013-14 A
EDC Net Trade VCM Net Trade
KT
Source: Industry Estimates. A: Actual, E: Estimate
1335 13451402
1979
22632478
749
1048 1026
2011 -12 A 2012 -13 A 2013 -14A
Capacity Demand Import
KT
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OUTLOOK FOR VINYL SECTOR
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PVC demand expected to register strong growth
Demand to touch 2777 KT in 2015-16
No new capacity coming on-stream to meet the rising domestic
consumption; capacity addition in 2015-16 by RIL
PVC deficit to increase in future
Capacity Demand Import
13351345 1402 1402 1482
1979
22632478
27102960
749
1048 1026 11521396
2011-12 A 2012-13 A 2013-14 A 2014-15 E 2015-16 E
KT
Source: Industry Estimates. A: Actual, E: Estimate
1979
2263 23092438
2777
2011 -12A 2012-13A 2013-14A 2014-15E 2015-16E
PVC Apparent Demand
KT
Source: Industry Estimates. A: Actual, E: Estimate
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EDC & VCM Net Trade
Import dependency to increase!
Thank You!
-451-472
-541 -541
-440
-510 -510 -510
2012 -13A 2013 -14A 2014 -15E 2015 -16E
EDC Net Trade VCM Net Trade
KT
Source: Industry Estimates. A: Actual, E: Estimate
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INDIAN STYRENICS INDUSTRY
Review & Future Prospects
May 2015
REVIEW OF STYRENICS SECTOR
Asia Petrochemical Industry ConferenceINDIAN PETROCHEMICAL INDUSTRY
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Styrene derivative demand to register 7% growth next year
Demand for Styrenics in India
Styrene derivatives : Demand
SBR is expected to grow over 8% CAGR in 2011-15 period
(kT) 2010-11 2011-12 2012-13 2013-14 2014-15E 2015-16ECAGR
2011-2016
PS 256 248 250 217 225 239 -0.7%
EPS 81 78 83 82 84 88 2.4%
ABS 125 120 137 151 166 183 8.8%
SBR 174 197 239 255 277 294 8.3%
SAN 74 81 83 89 94 106 5.5%
Source: CPMA, E- EstimatedNote: Other minor applications of Styrene is estimated to constitute as a whole 50KT on consumption
Styrene Demand Trend
551
572
614
647
500
520
540
560
580
600
620
640
660
2012-13 A 2013-14 A 2014-15 E 2015-15 E
Styrene demand for derivative production (KT)
Source: Industry Estimates. A: Actual, E: Estimate
KT
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OUTLOOK FOR STYRENICS SECTOR
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Projected demand for Styrenics in next two years
ABS, SBR and SAN to grow at ~10%, 9% and 6% in 2014-15 respectively
Projected demand for Styrenics in India
Source: CPMA
(KT) Actual Projected % change year on year
2012-13 2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
PS 250 217 225 239 -13.3% 3.8% 6.2%
EPS 83 82 84 88 -1.2% 2.4% 4.8%
ABS 137 151 166 183 10.2% 9.9% 10.2%
SBR 239 255 277 294 6.7% 8.6% 6.1%
SAN 83 89 94 106 6.9% 5.6% 12.8%
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INDIAN ELASTOMERS INDUSTRY
Review & Future Prospects
May 2015
REVIEW OF ELASTOMERS
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Demand for PBR & SBR is expected to grow at 8%+ in 2014-15
Elastomers demand to grow @8% in next two years
348
411
474508
550590
2010 -11 A 2011 -12 A 2012 -13 A 2013 -14 A 2014 -15 E 2015 -16 E
Source: Industry Estimates. A: Actual, E: Estimate
KT
PBR demand increased by 7.5%; SBR by 7% in ‘14
124
155168
180195
209
PBR
174
197
239255
277294
2010-11 A 2011-12 A 2012-13 A 2013-14 A 2014-15 E 2015-16 E
SBR
Source: Industry Estimates. A: Actual, E: Estimate
KTKT
2010-11 A 2011-12 A 2012-13 A 2013-14 A 2014-15 E 2015-16 E
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SBR deficit stood at 205 KT in 2013-14;expected to reduce substantially
to 57 KT in 2014-15 and then touch 4 KT by 2015-16
Elastomers imports stood at 369 KT in 2013-14
-94 -95-81
-85
-219
-205
-57
-4-15 -18
-21 -25-22 -25 -27-32
2012-13 A 2013-14 A 2014-15 E 2015-16 E
PBR SBR NBR EPDMKT
Source: Industry Estimates. A: Actual, E: Estimate
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OUTLOOK ELASTOMERS
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Elastomers to register growth rate of 8% in 2014-15 and 7% in 2015-16
Elastomers import dependency to decrease by 2015-16
New capacity being added in next two years in SBR and PBR
Source: Industry Estimates. A: Actual, E: Estimate
100%
100%
100%
56%
51%
47%
18%
78%
86%
39%
42%
53%
2015-16 E
2014-15 E
2013-14 A
PBR SBR NBR EPDM
Fig
s in
%Outlook for 2014-15 & 2015-16 is positive but subdued
7.5% 8.1% 7.5%6.7%
8.6%
6.1%
8.6%7.9%
9.8%
8.0%
5.7%
13.5%
0%
5%
10%
15%
2013-14 A 2014-15 E 2015-16 E
PBR SBR NBR EPDM
Fig
s in
%
Source: Industry Estimates. A: Actual, E: Estimate
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FIBRE INTERMEDIATE
Review & Future Prospects
May 2015
REVIEW OF FIBRE INTERMEDIATE SECTOR
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Fibre Intermediate witnessed a 9% growth in 2013-14
And is expected to grow at ~7% in next two years
Acrylonitrile demand grew by 27% in 2013-14
Acrylonitrile demand expected to grow at ~5% in 2014-15
93
96
100
104
2012-13 A 2013-14 A 2014-15 E 2015-16 E
Caprolactam
115
147154
160
2012-13 A 2013-14 A 2014-15 E 2015-16 E
Acrylonitrile
KT KT
Source: Industry Estimates. A: Actual, E: Estimate
59586481
6824
7357
2012-13A 2013-14A 2014-15E 2015-16E
KT
Source: Industry Estimates. A: Actual, E: Estimate
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Demand 2013-14: PTA ~7% & MEG ~12%
In 2014-15 demand for PTA is expected to grow at ~7%
Fibre intermediate Demand supply : 2013-14
Fibre intermediate production was dominated by PTA & MEG, 97% share in total production in 2013-14
1644
1840 18551950
2012-13 A 2013-14 A 2014-15 E 2015-16 E
MEG
41064398
4715
5143
2012-13 A 2013-14 A 2014-15 E 2015-16 E
PTAKT KT
Source: Industry Estimates. A: Actual, E: Estimate
A C N1%
Caprolactam 2%
PTA74%
MEG23%
A C N2%
PTA68%
MEG28%
Caprolactam2%
Fibre Intermediate Production 4582 KT Fibre intermediate Demand 6481 KT
Figures in %
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Fibre Intermediate Total capacity @5240KT : 2013-14
Fibre Intermediates trade deficit @1899 KT in 2013-14
PTA and MEG constituted 50% and 44% of the total 1963 KT fibre intermediates imported in 2013-14;
Deficit to reduce significantly by 2015-16 to 733 KT with PTA exports rising and nil imports
40 40 4070 70 70
3930 3930 3930
1300 1200 1200
Acrylonitrile Caprolactam PTA MEG
2012-13 A 2013-14 A 2014-15 E
KT
Source: Industry Estimates. A: Actual, E: Estimate
-80 -110 -126 -131
-10 -11 -13 -15
-644
-978-1015
231
-587
-800
-895 -858
2012-13 A 2013-14 A 2014-15 E 2015-16 E
Acrylonitrile Caprolactam PTA MEG
Source: Industry Estimates. A: Actual, E: Estimate
KT
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OUTLOOK FOR FIBRE INTERMEDIATE SECTOR
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Fibre intermediate demand to grow in the range of 5%-8% over next two years
Demand Outlook for next two years
Fibre Intermediate Capacity Addition in 2015-16
PTA Capacity addition by RIL in 2015-16
102
Source: Industry Estimates. A: Actual, E: Estimate
4.8%4.0%
7.2%
0.8%
27.7%
3.8%2.9%
3.9%
7.1%
9.1%
11.9%
5.1%
2013 -14 A 2014 -15 E 2015-16 E
Acrylonitrile Caprolactam PTA MEG
Fig
ure
in %
Source: Industry Estimates. A: Actual, E: Estimate
5240 5240
6962
2013-14 A 2014-15 E 2015-16 E
KT
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Import dependency to decrease to nil for PTA
Exportable surplus from 2015-16 in case of PTA
103
71% 75%82% 82%
11% 11% 13%14%16%
22% 22%
0%
40%47%
51%48%
Acrylonitrile Caprolactam PTA MEG
Figure in %
Source: Industry Estimates. A: Actual, E: Estimate
Thank You!
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Members of CPMA
708, 7th Floor, Kailash Building, 26, Kasturba Gandhi Marg, New Delhi-110001, INDIA
Phone: +91-11- 43598337, Fax:+91-11-43598337
Email: cpmai@airtelmail.in | Website: www.cpmaindia.com
1. Chemplast Sanmar Ltd.
2. DCM Shriram Ltd.
3. DCW Ltd.
4. Engineers India Ltd.
5. Finolex Industries Ltd.
6. GAIL India Ltd.
7. Gujarat State Fertilizers & Chemicals Ltd.
8. Haldia Petrochemicals Ltd.
9. HPCL – Mittal Energy Ltd.
10. Indian Oil Corporation Ltd.
11. Indian Synthetic Rubber Ltd.
12. LG Polymers (India) Pvt. Ltd.
13. MCC PTA India Corpn. Pvt. Ltd.
14. OMPL Mangalore Petro Chemicals Ltd.
15. ONGC Petro Additions Ltd.
16. Reliance Industries Ltd.
17. Styrolution ABS (India) Ltd.
18. Styrolution India Pvt Ltd.
19. Supreme Petrochem Ltd.
20. Tamilnadu Petroproducts Ltd.
Chemicals & Petrochemicals Manufacturers’ Association
CPMA is the apex forum representing the Indian Petrochemical Industry, Established in 1993, the
Association offers its members a podium to collectively present their ideas, voice their concerns
and offer suggestions on relevant issues. It provides a linkage between the industry, the
Government and the society. It interacts with policy makers and industry associations to develop
and maintain harmonious and conducive business conditions.
The Association, registered under the Indian Societies Act, is widely recognized as one of the
national apex bodies of the Indian Petrochemical Industry by all Ministries and Departments of
Government of India, apex Chambers of Commerce and Industry and other related Associations in
India and abroad. CPMA is affiliated to the Confederation of Indian Industry (CII). The Association
is also a Steering Committee Member of the Asia Petrochemical Industry Conference (APIC) and
had successfully hosted the annual APIC 2010 conference on May 13-14, 2010 in Mumbai.
CPMA comprises of various sub-committees constituted to effectively focus on key areas within
petrochemicals like Polyolefins, Vinyls, Styrenics, Elastomers, Fibre Intermediates and Surfactants.
CPMA has also taken the lead to set up and promote the India Centre for Plastics in the
Environment (ICPE) to deal with all environmental issues connected with the usage of plastics.
Chemicals & Petrochemicals Manufacturers’ Association
Contact Person : Mahinder Singh - Secretary General CPMA
708, 7th Floor, Kailash Building, 26, Kasturba Gandhi Marg, New Delhi – 110001, INDIA
Phone: +91-11-43598337, Fax : +91-11-43598337
Email : cpmai@airtelmail.in Web: cpmaindia.com
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