Indian Polymer Industry

Past, Present and Future

G.S. Kapur and Shashikant

Indian Oil Corporation Limited R&D Division Faridabad 121 007, India
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Outline
Indian Journey so far Indian Chemical Industry Indian Polyolefin Industry-Outlook Growth Drivers Challenges Conclusions
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India - a snap Shot

Independence in 1947

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

Ranks 84th in corruption list

China makes 40,000 Kms of road In the same time India makes 6000 Kms
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Still, there are some good news..

Polypropylene growth over 25% Polyethylene growing @ healthy double digit Aviation sector grew by over 20% Indian, If not Indian are making their presence in global business. Global recession Not much Impacted. Automotive growth over 20% IInd Fastest growing economy will grow by 8-9%

Large Gas discovery-Changing energy landscape

Polymer Growth Vs GDP - Global

Per Capita Polymer Consumption vs Per Capita GDP - 2009

PO + PVC ~ 5.7 kg Polymers ~ 8 kg

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Ref: Chemical & petrochemical Manufacturers Association, India

Polymer Growth Vs GDP - India

PP1.4 X GDP HDPE1.1 X

LLDPE1.7 X

Average of Last 5 Years

With robust GDP projections; all polymers are expected to grow in double digits
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Ref: Chemical & petrochemical Manufacturers Association, India

Major Polymers Outlook India

Product HDPE LLDPE LDPE PP EVA PVC 2010 Short Short Short Surplus Short Short 2016 Short Short Surplus Short Short Short

Considering all the announced capacities (under construction and commissioned); India still will import over 3 MMT of Polymers in 2016

Indian Chemical Industry

Indian Chemical Industry

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 200 Billion by 2020, Ranks 13th in the world
9 Industrialization and Economic Growth Key Drivers

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 to other countries, due to higher cost of power, import duties, taxes and cost of capital and Low focus on R&D few initiatives to innovate processes

In spite of disadvantages, few proactive companies created 10 sizable International presence

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 Polyolefins A decade back, India met its demand of polymers through imports

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

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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 of Indian polymers is summarised as under:1957-Polystyrene 1959-LDPE 1960-SBR 1961-PVC 1968- HDPE 1978-Polypropylene

The first Integrated Petrochemical Complex Indian 12 Petrochemical Corporation Ltd now a part of RIL - 1969

Indian Polymer Industry Major Milestones

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

Commodity Polymer Consumption Indian Scenario

Estimated Global polymer consumption :193 million TPA Name Quantity(MTPA) 71 PE: 48 PP: 36 PVC: 16 PET: PS and others: 22

Fig. (Million TPA)

Polymer consumption in India about 3.8% of global consumption Indian PE consumption is 3.7% of Global PE capacity. 14 Indian PP consumption is 4.7% of Global PE capacity.

Polymer Consumption India Vs Global

120 100 80 60 40 20 0 India ASEAN China World USA 17 8 30 30

Per Capita Polymer Consumption (Kg) 2007-08

100

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Polyolefin Industry

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Current Feedstock Pattern

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Naphtha Supply & Demand

India Continuous to be net exporter of Naphtha

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Ref: PPAC, Govt of India

Naphtha Allocation
100 80 60 40 20 0 2006 2008 2010 2012 Power Fertiliser Petrochemical

Naphtha consumption shifted to Petrochemicals drastically

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Ref: PPAC, Govt of India

Monomer capacity Current Scenario - India

Only ~3% of Global capacity
Operating rates in 2010 C2 production = 3 mmt C3 production = 2.7 mmt

>

>

Source: Crisil

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Capacity addition >C2 and >C3 2011-2014

>C

>C

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Indian Polyolefin Industry Current Scenario

LLD/HD

Existing Upcoming
Source: HPL Market Dominated By Only 4 Manufacturers 22

Ref: IOCL data base

Petrochemical Capacity Addition -India

Company IOCL, Paradip ONGC, Dahej (OPAL) RIL, Jn GAIL, Pata PE None 1100# 550 90 PP 650 340 None None 440 60 350 1950 Exp Time line 2012-13 Q1 2013 2014 Yet to declare 2011-12 2011-12 2011-12

MRPL None BCPL, Assam 220 HPCL-Mittal, None (HMEL) Bhatinda Total, KT 1960

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

India building huge Polymer capacities

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Ref: IOCL data base

HDPE Market Segments

2010-11 / 1459 KTA PIPE COAT 2% FILM 6% IM 13% PE-100 6% PE-63/80 7% HM-FILM 18% OTHERS 3% Raffia 18% BM-GP 18%

MBM/LBM 9%
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HDPE Major Market Blow Molding

Ref: IOCL data base

LLDPE Market Segments

2010-11 / 1043 KTA

Market Dominated by Film Sector

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Ref: IOCL data base

PP Market Segments
RCP 3% EXT 5%
2010-11 / 2462 KTA

ICP 14%

F&E 6%

Raffia 36%

BOPP 10%

IM 16%

TQ 10%

Major Sector Raffia, Injection Molding and Impact 26 Copolymers

Ref: IOCL data base

Demand Supply Balance (2010-2011)

Capacity LDPE LLDPE/HD Swings HDPE All PEs PP 205 1585 1055 2845 3575 Production Import 197 1040 1450 2687 2900 180 23 130 333 245 20 105 125 779 Export Apparent/ Demand 377 1043 1459 2879 2462

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Ref: Chemical & petrochemical Manufacturers Association, India

Indian Polymer Demand

PP, 4441

PVC, 3331 2462 1926 1459 1043 377 LDPE, 480 LLDPE, 1866 HDPE, 2381

Product 10-11 HDPE LLDPE LDPE PP PVC 1459 1043 377 2462 1926

15-16 2381 1866 480 4441 3331

CARG 10% 12% 6% 12% 10%

Growing at 11%+

Indian polymer growth is robust In 2015-16 India will import 3 Mn MT of polymers Case to build additional capacity
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Ref: 12 th Indian PETROCHEM Conference

PE (HD + LL) Demand Vs Supply

5000 4000 3000 2000 1000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016
IOCL addition OPAL RIL

Supply Demand

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

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Ref: Chemical & petrochemical Manufacturers Association, India

LDPE- Demand Vs Supply

700 600 500 400 300 200 100 0 2009 2010 2011 2012 2013 2014 2015 Supply Demand
RIL addition

RIL adding 400 KTA of LDPE capacity will ease the situation LDPE has reached equilibrium with LLDPEhigher growth projected
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Ref: Chemical & petrochemical Manufacturers Association, I ndia

PP - Demand Vs Supply
6000 5000 4000 3000 2000 1000 0
2008 2009 2010 2011 2012 2013 2014 2015 2016
HMEL IOCL OPAL / GAIL

Supply Demand

India will turn PP importer by 2016 Deficient ~ 500 KTA

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Ref: Chemical & petrochemical Manufacturers Association, India

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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Growth Drivers

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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
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Very High Growth Rate for Polymer Consumption

Strong Fundamentals

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Rising India

Source: World bank 36

Promising India

37 Source: IMF World Recovery Outlook, October 2010

Confident India

Source: Nielsen Global Consumer Report, Oct10

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Young India

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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 Groundnut Cultivation Total area: 6.8 million hectares developed countries) Estimated food wastage is about worth US$ 1 Billion
Even as 1% of this land is cultivated using Mulch Films5000 MT PE required for 1 season

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

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

Growth - Automobiles

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

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Growth In Luxury Goods Consumption

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Growth in Communication

India second largest mobile user after China 575 Million Mobile user and 37 Million Landline User43

Key Growth Areas (MMTPA)

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Demand Change in India (MMTPA)

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

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Barriers to Growth

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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 around 3Mn MT of POs by 2015 - 16. There is enough DEMAND expansion. to demand capacity

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Summary
Indian refinery capacity and petroleum products to be surplus. Indian production of Naptha, C2 and C3 to remain competitive. Middle East is not a real threat; though next 2 years to be tough.
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Indian Oil Corporation Limited Enabling the growth.

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Indian Oil Corporation Limited

Indias largest commercial enterprise Highest ranked Indian company in the Fortune Global 500 listing: Rank 98th Revenue for the fiscal 2010-11: US$ 73 billion

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Refinery Network
Panipat
12.0

Controls 10 of India's 20 refineries

2.35

BRPL Mathura
8.00

Barauni
6.00

Digboi 0.65 Guwahati

1.0

Koyali
13.7 15.0

Haldia 6.00 Paradip CPCL

9.50 IOC Refineries Proposed Refinery Stand Alone

Refining capacity: 60.20 MT/annum (1.2 million barrels per day) 53

Pipeline Network
Jalandhar

Bhatinda Panipat Rewari Sanganer

Ajmer Jodhpur

Sangrur

Ambala Roorkee Najibabad Meerut Delhi Mathura

Tundla

Largest pipeline network in the country-9300 Kms

Tinsukia Siliguri Bongaigaon Guwahati Barauni
Bolpur

Chaksu Chittaurgarh

Digboi

Kanpur

Sidhpur Mundra Salaya

Kot
Ahmedabad
Navagam

Rajbandh Ratlam

Koyali
Dahej

Maurigram Budge Budge

Haldia Paradip

Mumbai

LEGEND
Chennai Sankari

EXISTING CRUDE OIL PIPELINES

EXISTING PRODUCT PIPELINES ONGOING PRODUCT PIPELINE 54

Trichy Madurai

ONGOING CRUDE OIL PIPELINE

O SCALE

Marketing Network

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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
MTBE 38 KTA (CD Tech) 1-Butene 15 KTA (IFP/Sulzer) LAB - 120 KTA (UOP) PX - 360 KTA (UOP) PTA - 553 KTA (Invista)

Just Commissioned
Naphtha Cracker (ABB Lummus) 857 KTA of Ethylene / 600 KTA of propylene MEG - 320 KTA (Scientific Design) Swing LLDPE/ HDPE - 350 KTA (Nova-SCLAIRTECH)-Solution HDPE - 300 KTA (Basell-Hostalen) Slurry PP - 600 KTA (Basell-Spheripol) Bulk & gas

Planned (Tentative)
Liquid Cracker (PDRP-Phase-II) HDPE /LLDPE , LDPE (PDRP-Phase-II) PP 650 KTA (PDRPPhase-I) (Basell-Spheripol PX (PDRP-Phase-I) MEG (PDRP-Phase-II) Styrene 600 KTA (PDRP-Phase-I) (ABB 57 Lummus)

Petrochemical & Polymer R&D in IOCL

State-of-the-art Petrochemical R&D Infrastructure

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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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