INDIAN PETROCHEMICAL

INDUSTRYCountry Paper & Committee Presentations

Chemical & Petrochemicals Manufacturers Association, India

Asia Petrochemical Industry Conference17 - 18 MAY 2012, Kualalumpur, Malaysia

Kualalumpur Convention Centre

Inside coverBlank

INDIAN PETROCHEMICAL

INDUSTRYCountry Paper & Committee Presentations

Asia Petrochemical Industry Conference

17 - 18 May, 2012

Kualalumpur Convention Centre,

Kualalumpur, Malaysia

Asia Petrochemical Industry Conference17 - 18 MAY 2012, Kualalumpur, Malaysia

Kualalumpur Convention Centre

Chemical & Petrochemicals Manufacturers Association, India

Blank

SECTION 1 1

THE INDIAN ECONOMY: REVIEW OF 2011 & OUTLOOK FOR 2012 3

THE INDIAN ECONOMY SNAPSHOT 3

2011 BROAD BASED GROWTH 3

TRADE AND BALANCE OF PAYMENT 5

PERFORMANCE OF CORE INDUSTRIES 6

OUTLOOK FOR 2012: INDIA & GLOBALIZATION 8

SECTION 2 9

PETROCHEMICAL INDUSTRY IN INDIA 11

PETROCHEMICAL INDUSTRY REVIEW OF 2011 & OUTLOOK FOR 2012 12

POLYMERS 12

POLYOLEFINS 13

VINYLS: PVC 13

STYRENICS 14

A. POLYSTYRENE 14

B. ACRYLONITRILE-BUTADIENE-STYRENE (ABS) 14

C. STYRENE-ACRYLONITRILE (SAN) 15

OLEFINS (INCLUDING BUTADIENE, STYRENE, EDC & VCM) 15

A. ETHYLENE & PROPYLENE 15

B. BUTADIENE 16

C. STYRENE 16

D. EDC & VCM 16

FIBRE INTERMEDIATES 17

SYNTHETIC FIBRES 19

AROMATICS PARAXYLENE 21

SURFACTANTS 22

SYNTHETIC RUBBER 22

CARBON BLACK FEEDSTOCK & CARBON BLACK 23

OTHER KEY PETROCHEMICALS 24

OUTLOOK FOR THE OVERALL INDIAN PETROCHEMICAL INDUSTRY 27

I 2012 Asia Petrochemical Industry Conferenceth th17 & 18 May 2012, Kualalumpur, Malaysia

SECTION 3 29

DEMAND SUPPLY BALANCE: POLYMERS (KT) 31

DEMAND SUPPLY BALANCE: OLEFINS (KT) 33

DEMAND SUPPLY BALANCE: ABS, SAN, PX & SURFACTANTS (KT) 34

DEMAND SUPPLY BALANCE: FIBRE INTERMEDIATES (KT) 35

DEMAND SUPPLY BALANCE: SYNTHETIC FIBRES (KT) 36

DEMAND SUPPLY BALANCE: ELASTOMERS (KT) 38

DEMAND SUPPLY BALANCE: CARBON BLACK & CBFS (KT) 39

DEMAND SUPPLY BALANCE: OTHER KEY PETROCHEMICALS (KT) 40

TABLES

TABLE 1: ESTIMATED GROWTH OF THE INDIAN ECONOMY IN 2010-11 4

TABLE 2: BALANCE OF PAYMENTS SUMMARY 5

TABLE 3: INDIAS GDP GROWTH FORECAST- MARCH 2012 8

TABLE 4: POLYMER DEMAND SUPPLY 12

TABLE 5: POLYOLEFIN DEMAND IN INDIA ACTUAL & PROJECTED 13

TABLE 6: PVC DEMAND SUPPLY 13

TABLE 7: POLYSTYRENE DEMAND SUPPLY 14

TABLE 8: ABS DEMAND SUPPLY 14

TABLE 9: SAN DEMAND SUPPLY 15

TABLE 10: ETHYLENE & PROPYLENE NET AVAILABILITY 15

TABLE 11: BUTADIENE DEMAND SUPPLY 16

TABLE 12: STYRENE DEMAND SUPPLY 16

TABLE 13: EDC & VCM IMPORT INTO INDIA 17

TABLE 14 : FIBRE INTERMEDIATE DEMAND SUPPLY 18

TABLE 15: DEMAND SUPPLY BALANCE OF SYNTHETIC FIBRE 19

TABLE 16: PARAXYLENE DEMAND SUPPLY 21

TABLE 17: DEMAND & SUPPLY OF LAB & EO 22

TABLE 18: DEMAND SUPPLY BALANCE OF PBR, SBR & EPDM 23

TABLE 19: DEMAND SUPPLY BALANCE OF CBFS & CARBON BLACK 24

TABLE 20: DEMAND SUPPLY BALANCE OF BENZENE, TOLUENE, MX & OX 25

TABLE 21: SEGMENT-WISE DEMAND FOR PETROCHEMICALS (KT) 28

FIGURE

FIGURE 1: QUARTERLY GDP GROWTH RATE AT CONSTANT 2004-05 PRICES 3

FIGURE 2: INFRASTRUCTURE PERFORMANCE (% GROWTH) 7

FIGURE 3: PER CAPITA POLYMER CONSUMPTION VS PER CAPITA GDP ~ 2010 11

FIGURE 4: AGGREGATE PETROCHEMICAL DEMAND (ALL KEY SEGMENTS MMT) 27

II 2012 Asia Petrochemical Industry Conferenceth th17 & 18 May 2012, Kualalumpur, Malaysia

INDIAN PETROCHEMICAL INDUSTRY

REVIEW & OUTLOOK OF INDIAN ECONOMY 43

REVIEW & OUTLOOK OF PETROCHEMICAL INDUSTRY 51

POLYOLEFINS

REVIEW OF POLYOLEFINS SECTOR 55

OUTLOOK FOR POLYOLEFINS SECTOR 59

STYRENICS

REVIEW OF STYRENICS SECTOR 61

OUTLOOK OF STYRENICS SECTOR 65

PVC (VINYL)

REVIEW OF VINYL SECTOR 69

OUTLOOK FOR VINYL SECTOR 73

SYNTHETIC RUBBER (ELASTOMERS)

REVIEW OF ELASTOMERS 77

OUTLOOK FOR ELASTOMERS 80

SYNTHETIC FIBER RAW MATERIALS

REVIEW OF FIBRE INTERMEDIATES SECTOR 83

OUTLOOK FOR FIBRE INTERMEDIATE SECTOR 87

III2012 Asia Petrochemical Industry Conferenceth th17 & 18 May 2012, Kualalumpur, Malaysia

Images

012012 Asia Petrochemical Industry Conference th th17 & 18 May 2012, Kualalumpur, Malaysia

THE INDIAN ECONOMY

SECTION 1

Indian Petrochemical Industry

The Indian Economy: Review of 2011 & Outlook for 2012

The Indian Economy Snapshot

Managing growth and price stability were the major challenges of macroeconomic policymaking, in 2011-12. Inflation as measured by the wholesale price index (WPI) was high during most of the current fiscal year, though by the years end there was a clear slowdown.

Monetary policy remained focused on controlling inflation and anchoring inflationary expectations, with 13 adjustments in policy rates since March 2010. This had a short-term slowing effect on growth, as was anticipated.

The slowing inflation reflects the lagged impact of actions taken by the RBI and the government. Reflecting the weak manufacturing activity and rising costs, revenues of the centre have remained less than anticipated resulting in higher fiscal deficit.

The global economic environment, which has been tenuous at best throughout the year, turned sharply adverse in September 2011 owing to the turmoil in the Eurozone, and questions about the outlook on the US economy provoked by rating agencies. However, for the Indian economy, the outlook for growth and price stability at this juncture looks more promising. There are signs from some high frequency indicators that the weakness in economic activity has bottomed out and a gradual upswing is imminent.

2011 Broad Based Growth

The Indian economy is estimated to grow by 6.9% in 2011-12, after having grown at the rate of 8.4% in each of the two preceding years. This indicates a slowdown compared not just to the previous two years but 2003 to 2011 (except 2008-09). At the same time, sight must not be lost of the fact that, by any cross country comparison, India remains amongthe front-runners.The Economy of India is the 9thlargest in the world by nominal GDP and the 3rdlargest by purchasing power parity (PPP).The country is one of the G-20 major economies and a member of BRICS. In 2011, the country's GDP PPP per capita was $3,703 IMF, 127th in the world, thus making a lower-middle income economy. Indias GDP is $1.843 trillion (nominal: 9th; 2011) & $4.469 trillion (PPP: 3rd; 2011).

The growth rate of Investment in the economy is estimated to have registered a significant decline during the current year. The year has been witnessing a sharp increase in interest rates that resulted in higher costs of borrowings; and other rising costs affecting profitability.Reduction in corporate investment could be attributed to global factors, with the global economy exhibiting signs of slowing down as well as to domestic factors, namely increased cost of borrowing following the raising of interest rates in order to control inflation.

Growth in Agricultureand Allied Sectorsremains an important objective and a necessary condition for inclusive growth. Agriculture including allied activities accounted for 13.9% of GDP at 2004-5 prices in 2011-12 as compared to 14.5% in 2010- 11. Notwithstanding the declining trend in agricultures share in GDP, the importance of the sector to the economy is best understood with reference to its share in employment and in terms of its criticality for macroeconomic stability. However, it is a matter of concern that agricultural growth is still, to a certain extent, characterized by fluctuations due to the vagaries of nature.

Source: Economic Survey 2011-12

Figure 1: Quarterly GDP growth rate at constant 2004-05 prices

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032012 Asia Petrochemical Industry Conference th th17 & 18 May 2012, Kualalumpur, Malaysia

Indian Petrochemical Industry

Industrialgrowth, measured in terms of the index of industrial production (IIP), showed fluctuating trend. Growth had

reached 15.5% in 2007-08 and then started decelerating. Initial deceleration in industrial growth was largely on account

of the global economic meltdown. There was, however, a recovery from 2.5% in 2008-09 to 5.3% in 2009-10 and 8.2% in

2010-11. Fragile economic recovery in the US and Europe and moderately subdued expectations at home affected the

growth of the industrial sector in the current year. Overall growth during April-December 2011 reached 3.6% compared to

8.3% the corresponding period of the previous year.The industrial sector perfor