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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 : [email protected] Web: cpmaindia.com


COEX Convention Centre, Seoul, Korea.


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

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CONTENTSCONTENTSCONTENTSCONTENTS


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


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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


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


7-8 May 2015, Seoul, Korea 01Asia Petrochemical Industry Conference 2015


7-8 May 2015, Seoul, Korea02 Asia Petrochemical Industry Conference 2015



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.



7-8 May 2015, Seoul, Korea Asia Petrochemical Industry Conference 2015 03

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




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)




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




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.




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




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




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




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

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Exchange Rate (INR/USD)Forex Reserve in ($Bn)




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




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.




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




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.




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


PetrochemicalIndustry in India

SECTION 2



17




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




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




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%


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.




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%


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


Demand Growth% 0.8% -13.3% 3.8% 6.2%





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


Demand Growth% 14.2% 10.2% 9.9% 10.2%


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


Imports 5 7 7 8

Exports 0 0 0 0


Demand Growth% 2.5% 7.2% 5.6% 12.8%


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.




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



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.




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


Demand Growth% -1.1% 6.3% 43.4% 90.3%


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


Demand Growth% 6.0% 3.8% 7.3% 5.4%


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


Growth (%) 1.6% 2.2% 10.6% 0.0%





(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


Demand Growth (%) 1.5% 9.8% 0.0% 3.6%


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


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



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%




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%


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.




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


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


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



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



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



Imports 23 23 2 2

Exports 2 2 2 2

Demand 45 45 52 52

Demand Growth (%) 7.2% 0.0% 15.6% 0.0%


Aromatics – Paraxylene

PX demand 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


Demand Growth% 5.1% 1.5% 5.3% 45.8%





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%


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%.




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


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


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



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


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%





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%


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.




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



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%


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.


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 (%)



2013-14 2014-15E 2015-16E


Statistical Appendix

SECTION 3


STATISTICAL APPENDIXSTATISTICAL APPENDIX





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


Demand Growth% -8.4% 0.2% 14.0% 8.9%

EVA



Imports 105 120 135 140

Exports 0 0 0 0


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


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


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


Demand Growth% 4.1% -0.5% 7.0% 10.7%Source: Industry Estimates. A: Actual, E: Estimate




PP

Capacity 4140 4180 4180 4770

Production 3982 4188 4692 4897

Imports 430 400 517 379

Exports 845 893 720 639


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


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


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


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




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


PROPYLENE

Capacity 4141 4371 4255 5126

Production 3880 4150 4020 4650

Imports 0 0 0 0

Exports 6 0 10 10


BUTADIENE

Capacity 295 295 435 493

Production 223 226 229 374

Imports 2 0 0 6

Exports 113 108 46 20


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


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


Demand Growth% 1.5% 9.8% 0.0% 3.6%Source: Industry Estimates. A: Actual, E: Estimate




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


Imports 44 55 63 66

Exports 3 3 0 0


Demand Growth% 14.2% 10.2% 9.9% 10.2%

SAN

Capacity 90 130 130 150


Imports 5 7 7 8

Exports 0 0 0 0


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


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


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 Growth% 2.7% 10.9% 1.2% 5.5%Source: Industry Estimates. A: Actual, E: Estimate




Demand Supply Balance: Fibre Intermediates (KT)

(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E

ACN



Imports 82 110 126 131

Exports 2 0 0 0


Demand Growth% 1.8% 27.7% 4.8% 3.8%

CAPROLACTAM



Imports 10 11 13 15

Exports 0 0 0 0


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


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 Growth% 3.7% 11.9% 0.8% 5.1%





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


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


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



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



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



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%





Demand Supply Balance: Elastomers (KT)

(KT) 2012-13 A 2013-14 A 2014-15 E 2015-16 E

PBR

Capacity 74 85 114 124


Imports 94 96 82 81

Exports 1 1 2 2


Demand Growth% 8.3% 7.5% 8.1% 7.5%

SBR

Capacity 20 50 220 290


Imports 221 220 217 54

Exports 4 15 10 50


Demand Growth% 21.3% 6.7% 8.6% 6.1%

NBR



Imports 15 18 21 25

Exports 0 0 0 0


Demand Growth% 12.9% 8.6% 7.9% 9.8%

EPDM


Production 0 0 0 0

Imports 32 35 37 42

Exports 0 0 0 0


Demand Growth% 15.7% 8.0% 5.7% 13.5%





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


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 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%




MX



Imports 31 34 65 73

Exports 22 18 18 18


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 Growth% 5.8% -1.1% 2.9% -0.3%



Presentations for Committee MeetingsAPIC-2015

INDIAN COUNTRY REPORT


Asia Petrochemical Industry ConferenceINDIAN PETROCHEMICAL INDUSTRY



REVIEW & OUTLOOK OF

INDIAN ECONOMY

Review & Future ProspectsMay 2015



7-8 May 2015, Seoul, KoreaAsia Petrochemical Industry Conference 201550

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



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 (%)



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



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



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




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



Figures in %

Figures in %



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



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



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



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%*




REVIEW & OUTLOOK OF PETROCHEMICAL INDUSTRY



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


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


MMT



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


MMT


30 31

35

0

5

10

15

20

25

30

35

40

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

MMT


(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

64 7-8 May 2015, Seoul, KoreaAsia Petrochemical Industry Conference 2015



Thank You!


7-8 May 2015, Seoul, Korea Asia Petrochemical Industry Conference 20157-8 May 2015, Seoul, Korea Asia Petrochemical Industry Conference 2015 67

INDIAN POLYOLEFINS INDUSTRY

REVIEW OF POLYOLEFINS SECTOR




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



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



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


Polyolefin Production - 6.6 MMT Polyolefin Demand - 6.8 MMT

LDPE+EVA3%

LLD/HD34%

PP63%

LDPE+EVA

8%

LLD/HD44%

PP48%

Figures in %



-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


MMT



OUTLOOK FOR POLYOLEFINS SECTOR



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

%



Thank You!



VINYLS IN INDIA

REVIEW OF VINYL SECTOR



7-8 May 2015, Seoul, KoreaAsia Petrochemical Industry Conference 2015 7-8 May 2015, Seoul, Korea76 Asia Petrochemical Industry Conference 2015

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


1335 13451402 1402

1482

2011-12 A 2012-13 A 2013-14 A 2014-15 E 2015-16 E

PVC Capacity

KT




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


-332

-451-472

-411-440

-510

2011-12 A 2012-13 A 2013-14 A

EDC Net Trade VCM Net Trade

KT


1335 13451402

1979

22632478

749

1048 1026

2011 -12 A 2012 -13 A 2013 -14A

Capacity Demand Import

KT



OUTLOOK FOR VINYL SECTOR



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


1979

2263 23092438

2777

2011 -12A 2012-13A 2013-14A 2014-15E 2015-16E

PVC Apparent Demand

KT




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




INDIAN STYRENICS INDUSTRY

Review & Future Prospects

May 2015

REVIEW OF STYRENICS SECTOR



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)


KT



OUTLOOK FOR STYRENICS SECTOR



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%



Thank You!



INDIAN ELASTOMERS INDUSTRY


May 2015

REVIEW OF ELASTOMERS



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


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


KTKT

2010-11 A 2011-12 A 2012-13 A 2013-14 A 2014-15 E 2015-16 E



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




OUTLOOK ELASTOMERS



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


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

%




Thank You!



FIBRE INTERMEDIATE


May 2015

REVIEW OF FIBRE INTERMEDIATE SECTOR



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


59586481

6824

7357

2012-13A 2013-14A 2014-15E 2015-16E

KT




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


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 %



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


-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



KT



OUTLOOK FOR FIBRE INTERMEDIATE SECTOR



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


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


Fig

ure

in %


5240 5240

6962

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

KT



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%


Figure in %


Thank You!



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: [email protected] | 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 : [email protected] Web: cpmaindia.com

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