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Market Report, "India Petrochemicals Report Q4 2012", Published

New Energy research report from Business Monitor International is now available from Fast Market Research


Boston, MA -- (SBWIRE) -- 12/05/2012 -- The India Petrochemicals Report examines the enormous long-term potential exhibited by the local consumer market while highlighting short-term concerns about a sharp drop in manufacturing exports due to the eurozone crisis.

In this report BMI also examines the way in which producers are grappling with both the short-term risks and ongoing problems associated with land acquisition that have led to significant delays. It also analyses the impact of exchange rate volatility, which is exacerbating the effects of sustained high oil prices on petrochemicals margins.

India is now the world's third largest polymers market after China and the US, although its consumption rates are less than a third of China's and less than a tenth of those in the US. The main growth area will be packaging as the retail sector continues to surge. Growth in agro-industry is also likely to spur polymer use. Although BMI still forecasts 8% growth in chemicals output in 2012, the risks are to the downside.

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Additionally, given the country's low level of per capita chemicals consumption - even by developing country standards - the rate of growth is well below its potential.

BMI estimates national polymer capacity at 10.6mn tonnes in 2012, which is likely to provide for most of the country's current needs. Most capacity additions in recent years have focused on commodity plastics, following the domestic market trend. However, there are notable deficiencies, particularly in polypropylene (PP), and consumption growth rates of more than 9% will outpace growth in capacity.

India will therefore remain a prime export destination for foreign producers. There is also growing uncertainty over the Indian petrochemicals industry due to the volatility of the rupee and high feedstock prices. Even when bearing in mind the delays and cancellations, India will host a rapidly expanding petrochemicals industry.

Over the last quarter BMI has revised the following forecasts/views:

- In the Asia petrochemicals risk/reward ratings (RRRs) matrix, India remains in ninth place with 62.0 points, down 0.1 point on the previous quarter due to a modest deterioration in country risk. This puts it 1.5 points behind Australia and 11.4 points ahead of Indonesia.
- BMI estimates that Indian consumption of plastics will grow from 8mn tonnes in 2009 to 16mn tonnes by 2016 and 25mn tonnes by 2020, with a lower rate of growth than the 15-16% seen over the past few years.
- By 2016, polymer capacity is expected to reach just under 14mn tonnes per annum (tpa), at least 1.5mn tonnes below forecast consumption. In 2013 alone, around 1.7mn tpa of polyethylene (PE) capacity is set to be added.

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