Indian Polymer Industry Past, Present and Future

G.S. Kapur and Shashikant

Indian Oil Corporation Limited

R&D Division

Faridabad 121 007, India

1

Outline

•

•

•

•

•

•

Indian

Indian

Indian

Journey so far……

Chemical Industry

Polyolefin Industry-Outlook

Growth Drivers

Challenges

Conclusions

2

India -

Independence in 1947

a snap Shot

25% of the population below

poverty line 20% of the population have no

access to electricity

Food Inflation in double digit Ease of doing business index

– India ranks 133rd

8 Indian states are poorer

than 26 African

nations Ranks 84th in corruption list

China makes 40,000 Kms of road

In the same time India makes 6000 Kms

3

Still, there are some good news…..

over 20%

4

Large Gas discovery-Changing energy landscape

Global recession – Not

much Impacted.

Indian, If not Indian are making

their presence in global business.

Aviation sector grew by

Automotive

growth over 20%

IInd Fastest

growing economy

will grow by 8-9%

Polyethylene growing @

healthy double digit

Polypropylene growth over

25%

Polymer Growth Vs GDP - Global

Per Capita Polymer Consumption vs Per Capita GDP - 2009

PO + PVC ~ 5.7 kg

Polymers ~ 8 kg 5

Ref: Chemical & petrochemical Manufacturers’ Association, India

Polymer Growth Vs GDP - India

Average of Last 5 Years

6 Ref: Chemical & petrochemical Manufacturers’ Association, India

With robust GDP projections; all polymers are expected

to grow in double digits

GDP

HDPE-

1.1 X

PP-

1.4 X

LLDPE-

1.7 X

Major Polymers – Outlook India

Considering all the announced capacities (under

construction and commissioned); India still will import over 3

MMT of Polymers in 2016

Product 2010 2016

HDPE Short Short

LLDPE Short Short

LDPE Short Surplus

PP Surplus Short

EVA Short Short

PVC Short Short

Indian Chemical Industry

8

9

Indian Chemical

Indian Chemical industry - An

integral part of economy

Playing a key role in agriculture

and industrial development

Draws important linkages with

downstream industries e.g.

automotive, consumer

durables, engineering, food

processing

USD 80 Billion Industry – USD

Industry

•

•

•

•

13th 200 Billion by 2020, Ranks

in the world

Industrialization and Economic Growth – Key Drivers

10

Indian Chemical Industry -

Attributes

Characteristics of Indian chemical industry:

High domestic demand potential, as

Indian market develops and per capita consumption increases

High degree of fragmentation and small

scale operations

Low cost competitiveness compared other countries, due to higher cost

power, import duties, taxes and cost

capital and

Low focus on R&D – few initiatives

innovate processes

to of

of

to

In spite of disadvantages, few proactive companies created

sizable International presence

11

Indian Polymer Industry

• Polymer industry - an integral part of mega

petrochemical industry

Industry in India is about

four decades old

The domestic polymer

industry is dominated by

Polyolefin’s

A decade back, India met

its demand of polymers

through imports

•

•

•

Polyethylene and Polypropylene constitute ~ 71% of the commodity resins consumed in India

12

Chronology

Polymer Manufacturing

In 1957, the Plastics Industry in India made a modest

but promising beginning by commencing production

of Polystyrene

•

• The chronology of manufacture summarised as under:-

1957-Polystyrene

1959-LDPE

1960-SBR

1961-PVC

1968- HDPE

1978-Polypropylene

of Indian polymers is

The first Integrated Petrochemical Complex “Indian

Petrochemical Corporation Ltd” now a part of RIL - 1969

13

Indian Polymer Industry

Major Milestones

March 1969 – “Indian Petrochemical • 22nd

Corporation ltd incorporated”

• March-November commissioned

1973 – Xylenes – DMT

28th 15th • March 1978 to March 1979 –

Naphtha cracker commissioned along

with all down stream units

• 1982 – 1988: RIL entered

Petrochemical sector, commissioned operations PFY, PSF, LAB, PX and PTA

1992 - Indian Petrochemical Corporation Ltd commissioned

First Gas Cracker in India along with downstream MEG,

LDPE, LLDPE and PP plants

14

Commodity Polymer Consumption

Indian Scenario

• Estimated Global polymer

consumption :193 million TPA

Name

PE:

PP:

PVC:

PET:

PS and

Quantity(MTPA)

71

48

36

16

others: 22

•

•

•

•

•

Polymer consumption in India about 3.8% of global consumption

Indian PE consumption is 3.7% of Global PE capacity.

Indian PP consumption is 4.7% of Global PE capacity.

Fig. (Million TPA)

Per Capita Polymer Consumption (Kg) 2007-08

Polymer Consumption

India Vs Global

15

120

100

80

60

40 30 30

20

0

India ASEAN China World USA

100

17

8

Polyolefin Industry

16

17

Current Feedstock Pattern

Naphtha Supply & Demand

India Continuous to be net exporter of Naphtha

18 Ref: PPAC, Govt of India

Naphtha Allocation

100

80

60

40

20

0

Power

Fertiliser

Petrochemical

2006 2008 2010 2012

Naphtha consumption shifted to Petrochemicals drastically

19 Ref: PPAC, Govt of India

20

Monomer capacity

Current Scenario - India

Operating rates in 2010

C2 production = 3 mmt

C3 production = 2.7 mmt

> >

Source: Crisil

Only ~3% of Global capacity

21

Capacity addition >C2

and >C3

2011-2014

>C >C

Source: HPL 22

Indian Polyolefin Industry

Current Scenario

LLD/HD

Existing

Market Dominated By Only 4 ManufacturersRef: IOCL data base

Upcoming

Petrochemical Capacity

Addition -India

#Dahej: 10 mtpa of LNG brings more than 10 Wt% ethane

India building huge Polymer capacities 23 Ref: IOCL data base

Company

PE

PP

Exp Time line

IOCL, Paradip None 650 2012-13

ONGC, Dahej (OPAL)

1100#

340

Q1 2013

RIL, Jn 550 None 2014

GAIL, Pata

90

None

Yet to declare

MRPL None 440 2011-12

BCPL, Assam 220 60 2011-12

HPCL-Mittal, (HMEL) Bhatinda

None

350

2011-12

Total, KT 1960 1950

HDPE – Market Segments

FILM 6%

OTHERS 3%

Raffia 18%

PIPE COAT 2%

IM 13%

BM-GP 18%

PE-100 6%

PE-63/80 7%

HM-FILM 18%

MBM/LBM 9%

24 Ref: IOCL data base

HDPE Major Market – Blow Molding

2010-11 / 1459 KTA

LLDPE – Market Segments

25 Ref: IOCL data base

Market Dominated by Film Sector

2010-11 / 1043 KTA

26

PP Market Segments

RCP 3%

EXT 5%

ICP 14% Raffia

36% F&E 6%

BOPP 10%

IM 16% TQ

10%

se

Major Sector – Raffia, Injection Molding and Impact Copolymers

Ref: IOCL data ba

2010-11 / 2462 KTA

Demand Supply Balance

(2010-2011)

27 Ref: Chemical & petrochemical Manufacturers’ Association, India

Capacity

Production

Import

Export

Apparent/

Demand

LDPE

205

197

180

377

LLDPE/HD

Swings

1585

1040

23

20

1043

HDPE

1055

1450

130

105

1459

All PEs

2845

2687

333

125

2879

PP

3575

2900

245

779

2462

Indian Polymer Demand

PP, 4441

PVC, 3331

2462 HDPE, 2381

1926

1459

1043

377

LLDPE, 1866

LDPE, 480

• Indian robust

polymer growth is

• In 2015-16 India will import 3 Mn MT of polymers

• Case to build additional

capacity

28 Ref: 12th Indian PETROCHEM Conference

Product 10-11 15-16 CARG

HDPE 1459 2381 10%

LLDPE 1043 1866 12%

LDPE 377 480 6%

PP 2462 4441 12%

PVC 1926 3331 10%

Growing at 11%+

29

PE (HD + LL) Demand Vs Supply

5000 RIL

OPAL 4000

3000

Supply

Demand 2000

1000

0

2008 2009 2010 2011 2012 2013 2014 2015 2016

Ref: Chemical & petrochemical Manufacturers’ Association, India

Domestic Market to Remain Deficit- India will import ~ 600 KTA of HD/LL in 2016

IOCL addition

30

LDPE- Demand Vs Supply

700

600

500

400

300

200

100

0

Supply

Demand

2009 2010 2011 2012 2013 2014 2015

ndia

• RIL adding 400 KTA of LDPE capacity will ease the situation • LDPE has reached equilibrium with LLDPE- higher growth projected Ref: Chemical & petrochemical Manufacturers’ Association, I

RIL addition

31

PP - Demand Vs Supply

6000

5000

4000

3000

2000

1000

0

IOCL

Supply

Demand

2008 2009 2010 2011 2012 2013 2014 2015 2016

Ref: Chemical & petrochemical Manufacturers’ Association, India

• India will turn PP importer by 2016 • Deficient ~ 500 KTA

HMEL OPAL / GAIL

India – Fit Case for Capacity

Addition

Favorable Factors

Demand and growth of Polymers

Feed stock availability

Middle East - Not much a cause for worry

Indian manufacturers have real time

opportunities to expand / put up new facilities

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Drivers Growth

33

Indian Market Growth

Potential

Per Capita Polymer Consumption

India

Global Average

:

:

8 kg

~ 30 Kg

With more than 1 Billion population, if India were to reach 50% of global average, Additional polymer demand will be

approximately 8 Mio TPA

Very High Growth Rate for Polymer Consumption 34

Strong Fundamentals

35

36

Rising India

Source: World bank

37

Promising India

Source: IMF World Recovery Outlook, October 2010

Confident India

38

Source: Nielsen Global Consumer Report, Oct’10

39

Young India

Agriculture

•

•

25% of Indian GDP, growing @2%

2nd Green Revolution already set in –

Fruits and Vegetables

Corporate farming – Large Corporate

House already in race

•

• Post Harvest Management (PHM)-

(wastage 10-26% in India vs. 2% in

developed countries)

Groundnut Cultivation

Total area: 6.8 million hectares

Even as 1% of this land is

cultivated using Mulch Films-

5000 MT PE required for 1 season

• Estimated food wastage

worth US$ 1 Billion

is about

40 Ref; Modernizing the Indian Food Chain, FAIDA, CII & Mckinsey Study

Application of plastic in Crop management, PHM & Water management to play a vital role

41

Growth - Automobiles

Total sales of 12.2 million automobile vehicles achieved - 2009-10

42

Growth In Luxury Goods

Consumption

43

Growth in Communication

India second largest mobile user after China 575 Million Mobile user and 37 Million Landline User

Key Growth Areas

(MMTPA)

44

Demand Change in

India (MMTPA)

45

Country

FY 05-06

FY 11-12

% of Global Demand (FY 12)

China 30 44 24

US 26 30 17

India 5 12 7

Japan 7 8 4

Germany 6 7 4

Others 77 79 44

Total 151 180 100

Challenges

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47

Barriers to Growth

Environmental Issues

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Summary

• Indian demand for petrochemical is robust and growing fast.

• India petrochemical capacity addition lags the consumption growth.

• With all the projects under implementation / announced, India will import by 2015 - 16.

around 3Mn MT of POs

• There is enough DEMAND to demand capacity expansion.

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Summary

• Indian refinery capacity and petroleum products to

be surplus.

• Indian production

competitive.

of Naptha, C2 and C3 to remain

• Middle East is

to be tough.

not a real threat; though next 2 years

50

51

Indian Oil Corporation Limited Enabling the growth…….

Indian Oil Corporation Limited

India’s largest commercial enterprise

Highest ranked Indian company in the

98th Fortune ‘Global 500’ listing: Rank

Revenue for the

US$ 73 billion

fiscal 2010-11:

52

53

Refinery Network

Controls 10 of India's 20

2.35

BRPL

refineries Panipat 12.0

Digboi 0.65 Guwahati

1.0

Haldia 6.00

Mathura 8.00 Barauni

6.00

Koyali 13.7

Paradip 15.0

IOC Refineries

Proposed Refinery

Stand Alone CPCL 9.50

Refining capacity: 60.20 MT/annum (1.2 million barrels per day)

54

d

Pipeline Network

Jalandhar

Ambala Sangrur

N Roorkee Bhatinda

Najibaba Panipat Meerut

Tinsukia Rewari Delhi Sanganer Mathura

Siliguri Ajmer Tundla Bongaigaon Chaksu Digboi Jodhpur

Guwahati Kanpur Chittaurgarh

Barauni Kot

Ahmedabad

Sidhpur Bolpur

Rajbandh Mundra Maurigram Navagam Ratlam Budge Budge

Koyali Salaya

Haldia Dahej

Paradip Mumbai

LEGEND

EXISTING CRUDE OIL PIPELINES Chennai

Sankari EXISTING PRODUCT PIPELINES

ONGOING CRUDE OIL PIPELINE

ONGOING PRODUCT PIPELINE Trichy

Madurai

O SCALE

Largest pipeline network in the country-9300 Kms

Marketing Network

55

Expanding Wings

Globalization

• Exports

• Downstream

• Consultancy

Gas

• Sourcing

• City Gas Distribution

• Auto LPG

• CNG

• LNG Terminals

• Pipelines

Petrochemical

• LAB

• Px/PTA

• Polymers

E&P

• Domestic

• Overseas

• Operatorship

Alternatives

• Biofuel

• Wind

• Solar

• Hydrogen

• Nuclear

Moving across the value chain

Moving beyond the shores

Petrochemical & Polymer

Processes in IOCL

Implemented

Just Commissioned

Planned (Tentative)

MTBE – 38 KTA

(CD Tech)

Naphtha Cracker (ABB Lummus)

857 KTA of Ethylene / 600 KTA of

propylene

Liquid Cracker

(PDRP-Phase-II)

1-Butene – 15

KTA

(IFP/Sulzer)

MEG - 320 KTA

(Scientific Design)

HDPE /LLDPE , LDPE

(PDRP-Phase-II)

LAB - 120 KTA

(UOP)

Swing LLDPE/ HDPE - 350 KTA

(Nova-SCLAIRTECH)-Solution

PP 650 KTA (PDRP-

Phase-I)

(Basell-Spheripol

PX - 360 KTA

(UOP)

HDPE - 300 KTA

(Basell-Hostalen) Slurry

PX (PDRP-Phase-I)

PTA - 553 KTA

(Invista)

PP - 600 KTA

(Basell-Spheripol) Bulk & gas

MEG (PDRP-Phase-II)

Styrene 600 KTA (PDRP-Phase-I) (ABB

Lummus) 57

58

Petrochemical &

R&D

Polymer

in IOCL

State-of-the-art

Petrochemical R&D

Infrastructure

Acknowledgement

Management of Indian Oil Corporation Ltd for

kind permission to present this work

Thanks for your Valuable

Time and Attention

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