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This Industry Risk Ratings report from IBISWorld evaluates the inherent risks associated with the Petrochemical Manufacturing in the US industry. Industry Risk is assumed to be ‘the difficulty, or otherwise, of the business operating environment’. The report looks at the operational risk associated with this industry. Three types of risk are recognized in our analysis. These are: risk arising from within the industry itself (structural risk), risks arising from the expected future performance of the industry (growth risk) and risk arising from forces external to the industry (external sensitivity risk).

This approach is new in that it analyses non-financial information surrounding each industry. Industries are scored on a 9-point scale, where 1 represents the lowest risk and 9 the highest. The Industry Risk score measures expected Industry Risk over the coming 12-18 months. Industry Definition This industry comprises companies primarily engaged in the manufacture of petrochemicals which are chemicals derived from petroleum and natural gas. Key products include ethylene, propylene, butylenes, benzene, toluene, styrene, xylene, ethyl benzene and cumene.

These are basic building blocks used in the production of a variety of products including consumer products, automotive components and various durable and non-durable goods. Report Contents Risk Overview The Risk Overview chapter includes sections on Industry Definition and Activities, Industry Risk Score and Risk Rating Analysis. The Industry Definition and Activities section provides a detailed definition of the activities carried out by operators in this industry as defined in NAICS.

A list of the primary activities of the industry is also included. The Industry Risk Score section provides the Overall Industry Risk Score as well as the Risk Scores for each of the three types of risk covered that combine to form the Overall Industry Risk Score. These three types of risk are Structural Risk, Growth Risk and External Sensitivity Risk. The Risk Rating Analysis section discusses the underlying factors contributing to the Overall Industry Risk Score. Structural Risk

The Structural Risk chapter looks at risk arising from within the industry itself and provides a detailed discussion of the industrys level of exposure to seven key indicators. These key indicators are Barriers to Entry, Competition, Industry Exports, Industry Imports, Level of Assistance, Life Cycle Stage and Volatility of Industry. The Overall Structural Risk Score is a weighted aggregation of these seven key indicators. Each of the key indicators is discussed in detail in this section. Growth Risk The Growth Risk chapter looks at risks arising from the expected future performance of the industry.

The Overall Growth Risk Score is determined by amalgamating the scores for Recent Industry Growth and Forecast Industry Growth. Detailed analysis is provided discussing the reasons for the growth scores of both. Sensitivity Risk The Sensitivity Risk chapter looks at risks arising from forces (sensitivities) external to the industry. The Overall External Sensitivity Risk Score is determined by identifying the most significant (up to 6) external factors and weighting them to represent how significant each sensitivity is to the performance of the industry.

Examples of External Sensitivities are Exchange Rates, Interest Rates, Commodity Prices and Government Regulations. There is also a detailed analysis of the affect each of the sensitivities has on the industry, including charts and data tables where appropriate. Industry Risk and Industry Risk Scoring Methodology This chapter provides an overview of how IBISWorld defines Industry Risk and discusses the methodology used to arrive at an Industry Risk Score. There is also a table that provides a definition of the seven levels of Industry Risk.

The Petrochemical Manufacturing Industry report contains the most recent data and analysis on the industry’s key financial data, cost and pricing, competitive landscape, industry structure. Also updated are the latest trade, shipment, and inventory data through July 2010. This latest September update provides the data necessary to make informed forecasts and business planning after the recent seasonal changes in output. This industry has a high concentration of players, with the market consisting of fewer companies with relative similarity in size.

This aspect exposes the industry to further possibility of merger and acquisition opportunities, as well as anti-trust scrutiny. The competitive landscape section provides a closer examination of this situation. This 166-page report includes the most recent information on the domestic market, global market and overseas growth opportunities. This report provides the most current data available, such as shipments, inventory and trade data through the first half of 2010, and sophisticated forecasts up to 2014 accounting for the affects of the recent economic recession.

Industry analysts consider this report the most comprehensive and consistently updated guide to the industry. Definition & Classification This industry comprises establishments primarily engaged in (1) manufacturing acyclic (i. e. , aliphatic) hydrocarbons such as ethylene, propylene, and butylene made from refined petroleum or liquid hydrocarbon and/or (2) manufacturing cyclic aromatic hydrocarbons such as benzene, toluene, styrene, xylene, ethyl benzene, and cumene made from refined petroleum or liquid hydrocarbons.

This 6-digit NAICS industry (325110) is under the hierarchy of Basic Chemical Manufacturing Industry Group (3251), Chemical Manufacturing Subsector (325), and the Manufacturing Sector (31-33). Its SIC equivalent codes are: 2865 – Cyclic Organic Crudes and Intermediates, and Organic Dyes and Pigments (aromatics); and 2869 – Industrial Organic Chemicals, NEC (aliphatics). Revenue, Profitability & Foreign Trade Preview The industry’s revenue for the year 2009 was approximately $72. 0 billion USD, with an estimated gross profit of 34. 79%.

Import was valued at $7. 5 billion USD from 57 countries. The industry also exported $1. 4 billion USD worth of merchandise to 93 countries. Adding import value to and subtracting export value from the industry’s shipment value, the total domestic demand for the industry in 2009 was $78. 1 billion USD. Report Summary This 166-page report contains unparalleled industry market research in breadth and depth, providing a comprehensive view of the industry within the context of the overall manufacturing economy. The report’s supply and demand data covers U. S. hipments and international trade while also considering the industry’s capacity utilization. The industry level income statements, balance sheets, and capital expenditure analysis contain all the necessary data for financial benchmarking. In the cost analysis section, 41 upstream industries are analyzed to offer insight into the supply chain cost structure. For the channel and pricing structure, 119 downstream industries are analyzed. The competitive landscape section reports on the number of firms and their industry revenue share, market concentration, and a list of major players.

Related trade associations, industry standards, and trade publications are also listed. Our clients include Fortune 500 companies, manufacturers, international top consulting firms, major retailers and wholesalers, professional trade associations, financial corporations, universities, governmental entities, start-ups and individuals. We are committed to providing the highest level of quality to all our clients and assure your satisfaction in the report delivering as promised.

Strong growth in domestic petrochemicals demand in H110 is likely to abate, owing to a cooling in economic activity, but the Indian market is strong enough to justify the planned rapid increase in capacities, according to BMI’s latest report. In 2010 and going into 2011, there are signs are that we will see a cooling in activity due to a peaking of industrial activity, less accommodative global conditions and the winding down of the government’s economic stimulus. But industry expansion is proceeding, albeit with delays, with projects that were postponed during the global economic downturn now being revived.

During Q210, domestic demand for polyester products increased 10% , owing to increased non-apparel applications like home furnishing and technical textiles. Within the polyester segment, demand for polyethylene terephthalate (PET) increased 38% thanks to increased demand for beverages and bottled water. Polymer products demand remained stable during the quarter. Within the polymer segment, demand for polypropylene (PP) increased by 6% due to strong growth in the automobile sector, cement packaging and other industrial applications.

Demand for PE and PP is forecast to grow in double digits in 2010 and 2011, with some grades, such as biaxially-oriented polypropylene (BOPP) film for packaging, non-woven PP and pipe grade polyethylene (PE) expected to grow by more than 20%. In 2010, strong demand for low density PE (LDPE) and linear low density PE (LLDPE) film will suck in imports, while the country will remain self-sufficient in high density PE (HDPE) over the short term due to plentiful capacity and relatively poor demand. However, the PP sector in general is in danger of overcapacity.

India was a significant PP exporter in 2009, but moderation in growth in global demand at a time of rising capacity will dampen prospects on external markets. Yet, domestic demand has yet to catch up with growing output volumes. As a result, the pressure to differentiate will increase, as competition in the Indian market heats up. R&D and the introduction of higher grades of polymer products are therefore essential to add value. The main engine of the economy – domestic demand – will be fuelled by rising private consumption and fixed investment levels, as well as the need to rebuild inventories.

This has renewed confidence in the petrochemicals industry. BMI estimates 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 in recent years. Nevertheless, this should prompt growth in the industry of 9-10% per annum. Estimates for the investment needed to cater for the increase in demand for plastics in 2010-2016 has been put at US$10bn. Even when bearing in mind the delays and cancellations, India will host a rapidly expanding petrochemical industry.

The Indian government forecasts domestic polymer demand reaching 11mn tonnes in 2015, up from 5. 8mn tonnes in 2008. This implies that India will remain a net polymer exporter. However, BMI is doubtful India will come close to increasing the value of its production from the current US$15-18bn to US$30-35bn by 2012-2014, a level that the Tata Strategic Management Group (TSM) says is necessary to cover the rate of domestic demand growth. By 2014, BMI estimates that per capita polymer consumption will reach 14kg. While relatively modest by international levels, it will be far higher than 4. kg in 2007, which represented 20% of the global average. Moreover, it will make India the world’s third largest plastics consumer after the US and China. India is ninth in our Asia Petrochemicals Business Environment Ratings, with 61. 8 points, putting it 16. 3 points ahead of Indonesia and 1. 6 points behind Australia. India’s score has recovered in recent months as a result of the continued expansion of the sector as well as a reduction in negative risks associated with the economic downturn and international. Abstract Today the petrochemical industry remains significantly influenced by globalization of the world economy.

Rising demand for energy has translated to declines in supply, skyrocketing costs, and mounting environmental concerns. In keeping pace with these changes, the petrochemical industry continues to adjust through divestitures, joint ventures and other forms of partnership leading to fewer and larger producers of commodity petrochemicals with broader geographical reach. As shown in the chart below, prior to 1980, the United States, Western Europe and Japan accounted for 80% of primary petrochemical production in the world. In 2007, their share declined to 43% as a result of new capacities in other parts of the world.

Crude oil price has been on the rise since 2004 and traded for nearly $139 a barrel in mid-2008. The effect on regional downstream markets and end-use applications is significant. Situations in virtually all parts of the world—the Middle East, Asia, Eastern Europe, North and South America, and Africa—have growing global implications on supply and demand for petrochemicals and raw materials. Fossil fuels—coal, crude oil or petroleum, natural gas liquids and natural gas—are the primary sources of basic petrochemicals. The most important use of fossil fuels is in the production of energy.

In 2007, annual world energy production from fossil fuels, hydroelectric power and nuclear power amounted to 441 quadrillion British thermal units (Btus). Of this total, 64% or 282 quadrillion Btus came from crude oil, coal, natural gas and natural gas liquids. The fraction of fossil fuel energy equivalents diverted to primary petrochemical production was an estimated 26 quadrillion Btus or 8-10% of the total consumed. Although petrochemicals are a small subset of world energy demand, petrochemical prices are heavily influenced by fluctuations in the world energy market.

In the petrochemical industry, the organic chemicals with the largest production volume are methanol, ethylene, propylene, butadiene, benzene, toluene and xylenes. Ethylene, propylene and butadiene, along with butylenes, are collectively called olefins, which belong to a class of unsaturated aliphatic hydrocarbons having the general formula CnH2n. Olefins contain one or more double bonds, which make them chemically reactive. Benzene, toluene and xylenes are commonly referred to as aromatics, unsaturated cyclic hydrocarbons containing one or more rings.

Olefins, aromatics and methanol are precursors to a variety of chemical products and are generally referred to as primary petrochemicals. Given the number of organic chemicals and the variety and multitude of ways by which they are converted to consumer and industrial products, this report limits its discussion to these seven chemicals, their feedstock sources and their end uses. The following chart shows the changing geographical production pattern for these primary petrochemicals in the United States, Western Europe and Japan in comparison to the rest of the world:

The fastest-growing areas in petrochemical capacity are the Middle East and Asia outside of Japan, with double-digit annual growth rates. Most of the capacity buildup continues in these regions, furthering the globalization of the petrochemical industry. Further descriptions of the petrochemical industry in the Middle East and China are outlined in this report. Detailed discussions of individual primary petrochemical feedstocks, intermediates, derivatives and end-use market segments are available in other CEH reports.

The various CEH marketing research reports and product reviews on each petrochemical provide in-depth coverage and a definitive source of market information for these chemicals. Petrochemicals: A SWOT Analysis The Indian petrochemicals industry is finally discarding its nascent stage tag and the companies are now vying for a major chunk of the global pie of the petrochemicals market. Indian major Reliance has recently acquired a German polyester major Trevira GmbH and this marks the private sector giant’s entry into the European markets in a big way.

At the same time, ONGC and IOC are planning entry into the business in a major way as this is in line with their forward integration plans. The petrochemicals cycle is currently on a global uptrend thanks to growing demand from China and other developing nations. In the domestic markets, growing activity in infrastructure and construction segments coupled with strong growth in the auto sector on the back of lower interest rates have actually boosted the performance of the petrochemicals sector. Major beneficiaries of this uptrend are the integrated players such as Reliance Industries, GAIL and IPCL (to some extent).

A low per capita consumption of 4 Kgs of plastic as compared to a global average of 20 Kgs leaves enough scope for capacity expansion resulting in ONGC and IOC venturing into the business. The following are the major uses of the products: Polymer Products and the uses Product| Uses| LDPE/LLDPE| Consumer packaging/film, extrusion wires, cable coatings| HDPE| Fertilizers, household packaging, woven sacks, cartons, crates, luggage, pipes| Polypropylene (PP)| Cement packaging, monofilament yarn, ropes| PVC| Water pipe, electrical wires, cables, sheets|

Polybutadeine Rubber (PBR)| Automotive tyres and tubes, conveyor belts and footwear| Let us now do a SWOT analysis on the industry so as to have a better understanding of the prospects for the industry, going forward: Strengths: * Consolidation: The Indian petrochemicals industry has witnessed consolidation over the last few years and nearly 85% of the polymer capacity in the domestic market is with the top three participants (Reliance, IPCL and Haldia Petrochemicals (HPL)). Of the three companies mentioned, IPCL forms a part of the Reliance stable while GAIL is set to pick up stake in HPL.

Such high concentration is likely to benefit these players, as this would help reduce duplication of production. * Synergies: Most of the petrochemical players have integrated facilities, thereby reducing external dependence to a large extent. To put things in perspective, Reliance Industries uses naphtha from its own Jamnagar refinery as a feedstock for the petrochemicals production. IPCL uses Reliance’s vast and widespread marketing network to reach out to global consumers. On the other hand, GAIL utilizes natural gas for its petrochemicals capacity.

Rich natural gas is evacuated into the pipelines and after separation of the hydrocarbons such as ethane, propane and butane, the lean gas is transmitted to consumers such as power and fertilizer industry. Further, petrochemicals business being a high value add, would add further to the profitability of these integrated companies. Weaknesses: * Low bargaining power vis-a-vis the suppliers: Input costs form nearly 50% to 60% of the raw material costs. Further, gas prices are regulated but in short supply, while naphtha is an expensive source of feedstock.

Refineries realize the import parity prices on naphtha produced and in case of high feedstock prices, petrochemical players have little bargaining power against the suppliers. These players are therefore vulnerable to raw material prices. * Low Bargaining power vis-a-vis customers: In case of increase in input costs, the companies might not be able to pass on the rise to the consumers as the prices of products is highly influenced by factors such as international prices and supply. Opportunities: Low per capita consumption: Currently, domestic per capita polymer consumption is nearly 4 kgs while the global average is nearly 20 kgs. This underlines the fact that there is immense scope of capacity expansion in the country as the market to be tapped is huge. Further, spending on R&D activities is around 2% of sales as compared to an international average of 18%. This leaves enough room for product development. Also, currently, India has a chemicals trade deficit of about US$ 1. 5 bn a year, which leaves enough investment opportunities in the industry. Increased economic activity:The government has set aside nearly Rs 400 bn for infrastructure projects such as roadways, airports and convention centers and also towards rural housing augur well for the petrochemicals industry as this is likely to increase demand for various products (high density polyethylene, low density polyethylene among others) for the purpose of road development, packaging, cables and wiring. Also sustained growth in the auto sector is likely to keep the demand for petrochemical products high.

As per our estimates, the auto sector is likely to grow at nearly 12% over the next few years. Threats: * Customs duties: Historically, the domestic industry has been protected from overseas competition by high import duties imposed by the government. However, of late, Import duty on polymers has been steadily reduced and is currently at 20%. As part of its commitment to various multilateral and bilateral trade agreements, the government is likely to reduce duties going forward and this is likely to reduce the cushion enjoyed by the domestic players as against the landed cost of imported products. Growing competition: The domestic industry is likely to witness immense competition going forward with IOC all set to enter the segment with its Rs 64 bn project in FY06. Further, ONGC is also venturing into petrochemicals business. With commitments to reduce and eliminate tariff and non-tariff barriers, India, with huge market potential, might witness entry of global majors such as ExxonMobil, Dow Chemicals and Shell into the business. These global majors with deep pockets can actually lead into a pricing war, which could result in squeezing margins.

The above analysis is just to provide a view of the sector and by no way advocates any opportunities to invest in the petrochemicals sector. Taking a cue from their global counterparts, Indian majors such as IOC and ONGC are entering into this value add business in a huge way and this is likely to change the entire business dynamics of the companies, not only in India but Asia as Asia is fast becoming the largest petrochemicals manufacturing hub. Going forward, investors need to be aware of this reality and make informed investment decisions in the energy sector. Indian Petrochemical Industry

Product Type: Market Research Report Published by: India Infoline Ltd. Published: October 2004 Product Code: R642-0007 Description Indian petrochemical industry is almost a monopoly : Indian petrochemical industry is concentrated among few players. Reliance along with its 51% subsidiary IPCL accounts for two third of the entire industry. GAIL is the other major player and Haldia Petrochemical post restructuring will also become a main stream player. Domestic capacity is minuscule vis-a-vis global capacity: USA is the biggest player accounting for more than quarter percentage of the global capacity of about 115 MMTPA.

The second largest player Japan accounts for fewer than 7% of the global capacity. India on the other hand constitutes just about 2% of the world capacity. The Chinese impact: To what extent China is responsible for current upturn in petrochemical cycle? How long this bull run is expected to continue? What will be the role of Middle East in the supply demand dynamics? Demand supply dynamics: No sizeable capacity addition is expected globally in the next two years and demand is growing at a fast pace.

This would result in narrowing of demand supply gap. A deficit of 5mmt and 4. 5mmt of PE and PP is anticipated in Asia in the next two years Fiscal policy: With the reduction of import duty over the years, industry is now open to global competition. Further the duty differential between final products and raw material (naphtha) is narrowing down, and companies are facing increasing pressure on margins. However, relaxation in customs duty on project imports is expected to provide relief by way of reduction in cost of projects for future expansion.

Task Force on petrochemical industry: Keeping in view the potential of the domestic petrochemical industry and the need for development of high value added quality petrochemical products at globally competitive price the GoI set up a task force under the leadership of Dr G V Ramakrishna in the year 2000. Implementation of its recommendations would have far reaching implications for the industry. Upcoming projects and capacity expansion: With all the players on expansion drive mainly through brown field expansion, we might see structural shift in industry dynamics.

Oil behemoth Indian Oil Corporation (IOC) is slated to enter the industry in a big way by the end of 2005. The industry is likely to face fierce competition then. | | Petrochemicals| ? | Petrochemicals, as the name suggests, are chemicals obtained from the cracking of petroleum feedstock. Petrochemicals are used in many manufacturing fields. The industry is built on small number of basic commodity chemicals, also known as building blocks such as ethylene, propylene, butadiene, benzene, toluene and xylene. Ethylene, propylene and butadiene are commonly referred to as olefins, while benzene, toluene and xylene are known as aromatics.

Together, they form the basis of all petrochemical products. | ? | The broad product segments of the industry include: 1. Basic petrochemicals: These are the basic building blocks, which are divided into olefins and aromatics. These are used primarily for polymerization. These are mainly used to designate the capacity of industry. 2. Polymers: These are made from basic petrochemicals by polymerization. Major products include PVC, HDPE, LDPE and PP. These find use primarily in the packaging industry and plastic industry. 3. Polyesters: These are synthetic fibre used in textiles industry.

These include polyester filament yarn (PFY) and polyester staple fibre (PSF). 4. Fibre Intermediates: These consist of PTA, DMT, MEG, paraxylene, caprolactum, and acronitrile and are mainly used for manufacturing synthetic fibres like PFY and PSF. 5. Chemicals: These include Linear Alkyl Benzene (LAB), methanol, maleic anhydride, phenols, ethylene oxide, orthoxylene and vinyl acetate monomer. They find use in chemical industry. | ? | Petrochemicals production process consists of primarily two stages. In the first stage naphtha, produced by refining crude oil, or natural gas is used as a feedstock and is cracked.

Cracking (breaking of long chain of hydrocarbon molecule) produces olefins and aromatics. In stage two, these building blocks are polymerized (made to undergo chemical processes) to produce downstream petrochemical products (polymers, polyesters, fibre intermediaries and other industrial chemicals. | ? | The industry is oligopolistic in nature with four main players dominating the sector noticeably Reliance Industries Ltd (RIL), Indian petrochemicals Corporation Ltd (IPCL), Gas Authority of India Ltd (GAIL) and Haldia Petrochemicals Ltd (HPL). RIL along with IPCL accounts for 70% of the petrochemical capacity in the country.

However, the downstream petrochemical sector, especially polyester, is highly fragmented with more than 40 companies. This fragmented structure adversely affects the health of the industry. | ? | Petrochemical industry is a cyclical industry. Globally the petrochemical industry is characterized by sluggish demand and volatile feedstock prices. In India, consumption of petrochemical products on a per capita basis, is still one of the lowest in the world. For example in case of polyester, India’s per capita consumption is 1. 4 kg compared to 6. 6 kg for China and 3. 3 kg for the world.

In case of polymers, per capita consumption of India is 4 kg and is about a fifth of the world. Domestic demand for petrochemicals products has grown in double digits for a long period. | Key Points| | Supply| Supply currently outstrips demand and the operating rate of the crackers continues to be high across the globe. On the domestic turf, the situation is similar, however as the refineries are expanding their nameplate capacity, which inturn will lead to increase in production of naphtha. Increased naphtha will most likely be used for the petrochemical projects.

Thus, the supply is going to improve in the future. | | | Demand| Demand of the petrochemicals generate from the downstream industries, which in turn are dependent on the state and growth of the economy. Indian economy is poised to grow at 7%-8% for the next few years. Thus, the demands for the petrochemical products are bound to be on the higher end. | | | Barriers to entry| The petrochemical industry is capital-intensive by nature. The minimum economic size of an integrated plant is around 1 million tonnes per annum, which inturn call, for huge investments. | | |

Bargaining power of suppliers| Moderate to low, Inspite of the surplus naphtha production in the country, bargaining power of suppliers seems to be moderate. This is due to the fact that the suppliers are concentrated. However, going forward, integration is a ‘mantra’ for the oil refining companies. | | | Bargaining power of customers| Moderate to low, the downstream user industry is fragmented, which reduces their collective bargaining power. Import duties on the products have declined significantly over the past and with additional capacities coming up in the Middle East the bargaining power of the customers might improve to an extent. | | Competition| Competition within the domestic market is limited, as there are only a handful of players with world-class capacities. However, with reduction in duties, there is threat of imports from Middle East and the Asia Pacific region, which is going to increase the competition. Also, the refineries are getting integrated, which will reduce the industry concentration in terms of market share and inturn fuel competition. | | | | | Financial Year ’09| | ? | There are three naphtha-based and three gas-based cracker complexes in the country with a combined ethylene annual capacity of 2. m metric tonnes (MMT). Besides, there are four aromatic complexes also with a combined Xylenes capacity of 2. 9 MMT. | ? | The production of polymers accounted for almost 62 % of the total production of major petrochemicals during FY09. The domestic capacity of polymers was 5. 72 m metric tonnes (MMT) during FY09. With 88. 5 % capacity utilisation, production of polymers during FY09 at the level of 5. 06 MMT was attained. | ? | The domestic production capacity of synthetic fibres was 3. 46 MMT during FY09. With capacity utilization of about 73 %, production at the level of 2. 2 MMT was achieved. | | TOP| Current scenario and prospects| | ? | Global ethylene capacity utilization has remained above 90% since 2004 and is expected to stay high in CY10 onwards. Large capacity additions in the Middle East and Asia during CY09 to CY11 may impact operating rates thus marking the potential for a down cycle. The industry is also witnessing a high feedstock cost environment due to strong crude oil and resultant naphtha prices. In next five years, India’s ethylene capacity is expected to increase from current 3. 1 m tonnes to 5. 8 m tonnes, with a CAGR of nearly 14 %. | ? Globally 10% of cracker capacities are less than 5 years of age, whereas 23% cracker capacities are more than 30 years old. These aging facilities are likely to be under pressure from new world scale plants. The older crackers, which are mainly based on liquid feeds and are smaller in size (below 300 KT), are likely to be the most vulnerable during a down cycle due to higher variable costs and feedstock costs. | ? | PP, HDPE and LLDPE would continue to lead demand growth for polymers in the future. Overall demand growth is expected to be around 5. 3 %, marginally behind the capacity growth of 5. 4 % during the same period.

PE, PP and PVC demand in India is expected to remain firm in the near term. | | | Petrochemicals industry is crucial member of the Indian economy since it caters to the needs of major industries like power, telecom, cables, plastics, textiles etc. The report provides insight into various aspects of the Indian industry along with some relevant details about global industry. Low per capita consumption offers good potential to players planning to foray into the Indian petrochemical industry. For instance, the per capita consumption of polymers, synthetic fibres, synthetic rubber and plastics in India is very low – at 2. Kilograms, 1. 6 Kilograms, 0. 2 Kilograms, 3. 0 Kilograms respectively (whereas the global consumption is 17. 3 Kilograms 3. 9 Kilograms, 2. 1 Kilograms, 17. 0 Kilograms respectively). And to top this, the growth rate of the Indian industry during last four years has been around 15 percent whereas it was 4 percent in the global industry during the above period. This substantiates the huge potential that Indian petrochemicals market offers for future entrants. As a background, the report gives a brief history about the Indian petrochemicals industry, the segmentation and characteristics specific to the industry.

The industry can be segmented into primary petrochemicals (olefins such as ethylene, propylene and aromatics such as benzene, toluene), intermediate petrochemicals (such as DMT, PTA) and end products (such as synthetic fibres, polymers, synthetic rubber). The report deals in depth on the segmentation and on the products under each segment. Under characteristics specific to the industry, various entry barriers in terms of minimum economic size and capital requirements, import dependency of feedstock have been elaborated in detail.

The global scenario has been covered providing the market size (by value) of the global petrochemicals industry, shift in global industry from the West to Middle East and Asia, and general trends in the industry. The shifts/trends in global industry have been explained with ethylene as an example. The current scenario in the Indian petrochemical industry has been comprehensively covered with specific emphasis on government regulations pertaining to the industry, supply – demand scenario and the pricing aspects in the industry.

The government regulations have played an important role in the growth of the Indian industry. Focus has been given on divestment in the industry and government’s support to the industry in terms of anti dumping duties. Budget 2001 and exim policy 2001 has been analyzed, with detailed discussion on the implications of the proposals. A separate supply – demand side scenario of the report enlightens the reader with capacity of various products that are covered under segmentation, production and consumption in those products.

Since economies of scale plays an important role in the profitability, the capacity of various players in each product category is also given. The factors that have huge bearing on the revenues of the industry have been discussed. The report also gives the financial performance of the following major players: Gas Authority of India Limited Grasim Industries Limited Indo Rama Synthetics Limited Indian Petrochemicals Corporation Limited Reliance Industries Limited Petrochemical Industry The petrochemical industry in India has been one of the fastest growing industries in the country.

Since the beginning, the Indian petrochemical industry has shown an enviable rate of growth. This industry also has immense importance in the growth of economy of the country and the growth and development of manufacturing industry as well. It provides the foundation for manufacturing industries like construction, packaging, pharmaceuticals, agriculture, textiles etc. The Indian petrochemical industry is a highly concentrated one and is oligopolistic in nature. Even a few days back, only four major companies viz. Reliance Industries Ltd (RIL), Indian Petrochemicals Corporation Ltd. IPCL), Gas Authority of India Ltd. (GAIL) and Haldia Petrochemicals Ltd. (HPL) used to dominate the industry at a large extent. The recent amalgamation of IPCL with RIL has made the industry more concentrated further, as they jointly account for over 70% of country’s total petrochemical capacity. However, the scene is a bit different for the downstream petrochemical sector, which is highly fragmented in nature with over 40 companies exist in the market. The Characteristics of Indian Petrochemical Industry Petrochemical Industry in India is a cyclical industry.

This industry, not only in India but also across the world, is dominated by volatile feedstock prices and sulky demand. India has one of the lowest per capita consumptions of petrochemical products in the world. For example, the per capita consumption of polyester in India lies at 1. 4 kg only comparing to 6. 6 kg for China and 3. 3 kg for the whole world. Similarly, the per capita consumption of polymers is 4 kg in India, whereas the per capita consumption is around 20 kg for the whole world. The Growth The petrochemical industry in India came into existence during 1970s.

The 1980s and 1990s saw some rapid growths for Indian petrochemical industry. The biggest reason for this growth was the high demand for petrochemicals in India, which grew at an annual rate of 13 to 14% since late 90s. It also called for rapid expansion of capacity. The BMI forecast of average annual growth in India over 2007-2011 is 14 to 16%. However, the industry suffered setbacks during 2008 due to surge in the price of crude oil. It will be tough for Indian petrochemical industry to plug the deficit of 5mn TPA of ethylene and 4mn TPA of polymer by 2012 (according to the predictions of the government).

The Present Scenario Presently India has three gas-based and three naphtha-based cracker complexes with a combined annual capacity of 2. 9 MMT of ethylene. Besides this, there are also 4 aromatic complexes with a capacity of 2. 9 MMT of Xylenes. The production of 5. 06 MMT polymers during FY09 accounted for around 62% of the total production of key petrochemicals. It also achieved 88. 5% capacity utilization. The industry also produced 2. 52 MMT of synthetic fibres during FY09 with a 73% of capacity utilization. Key Segments Petrochemical industry is constituted of the following key segments: * Polymers:

The demand for polymers saw a growth of 13. 4% during 2007, comparing to a demand growth of 5. 6% in 2006. According to the prediction of Chemicals and Petrochemicals Manufacturers’ Association (CPMA), the demand growth for polymer would further be augmented to over 15% in the coming year. * Polyester Intermediates: The combined production of 5 fibre intermediates (CAN, DMT, Caprolactum, MEG and PTA was 3,417 KT during 2007. Among those, PTA and MEG accounted for 69% and 27% respectively, while the rest were DMT, Caprolactum and CAN. * Aromatics (Paraxylene): The demand for Paraxylene (PX) saw a growth of 18% during 2007.

According to the prediction of CPMA, it is expected to grow at the same rate in the coming year as well. * Benzene, Toluene, MX and OX: The demands for Toluene and OX saw a contraction rate of 4% and 10% respectively during 2007. However, Benzene and MX saw a positive growth though. Top Petrochemical Companies in India Though the Indian petrochemical industry is highly dominated by only a few players, however, there are a number of petrochemical companies in India, doing their share of business. Some of the top companies can be listed as below: * Reliance Industries Ltd. Haldia Petrochemicals Ltd. * Indian Oil Corporation * Gas Authority of India Limited * National Organic Chemical Industry Ltd. * Bongaigaon Refinery and Petrochemicals Ltd. * Manali Petrochemical Limited * I G Petrochemicals Limited * The Andhra Petrochemicals Limited * Tamilnadu Petroproducts Limited | India Petrochemicals Report Q4 2010 The India Petrochemicals Report provides industry professionals and strategists, corporate analysts, petrochemical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on India’s petrochemicals industry.

Strong growth in domestic petrochemicals demand in H110 is likely to abate, owing to a cooling in economic activity, but the Indian market is strong enough to justify the planned rapid increase in capacities, according to BMI’s latest report. In 2010 and going into 2011, there are signs are that we will see a cooling in activity due to a peaking of industrial activity, less accommodative global conditions and the winding down of the government’s economic stimulus. But industry expansion is proceeding, albeit with delays, with projects that were postponed during the global economic downturn now being revived.

During Q210, domestic demand for polyester products increased 10% , owing to increased non-apparel applications like home furnishing and technical textiles. Within the polyester segment, demand for polyethylene terephthalate (PET) increased 38% thanks to increased demand for beverages and bottled water. Polymer products demand remained stable during the quarter. Within the polymer segment, demand for polypropylene (PP) increased by 6% due to strong growth in the automobile sector, cement packaging and other industrial applications.

Demand for PE and PP is forecast to grow in double digits in 2010 and 2011, with some grades, such as biaxially-oriented polypropylene (BOPP) film for packaging, non-woven PP and pipe grade polyethylene (PE) expected to grow by more than 20%. In 2010, strong demand for low density PE (LDPE) and linear low density PE (LLDPE) film will suck in imports, while the country will remain self-sufficient in high density PE (HDPE) over the short term due to plentiful capacity and relatively poor demand. However, the PP sector in general is in danger of overcapacity.

India was a significant PP exporter in 2009, but moderation in growth in global demand at a time of rising capacity will dampen prospects on external markets. Yet, domestic demand has yet to catch up with growing output volumes. As a result, the pressure to differentiate will increase, as competition in the Indian market heats up. R&D and the introduction of higher grades of polymer products are therefore essential to add value. The main engine of the economy – domestic demand – will be fuelled by rising private consumption and fixed investment levels, as well as the need to rebuild inventories.

This has renewed confidence in the petrochemicals industry. BMI estimates 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 in recent years. Nevertheless, this should prompt growth in the industry of 9-10% per annum. Estimates for the investment needed to cater for the increase in demand for plastics in 2010-2016 has been put at US$10bn. Even when bearing in mind the delays and cancellations, India will host a rapidly expanding petrochemical industry.

The Indian government forecasts domestic polymer demand reaching 11mn tonnes in 2015, up from 5. 8mn tonnes in 2008. This implies that India will remain a net polymer exporter. However, BMI is doubtful India will come close to increasing the value of its production from the current US$15-18bn to US$30-35bn by 2012-2014, a level that the Tata Strategic Management Group (TSM) says is necessary to cover the rate of domestic demand growth. By 2014, BMI estimates that per capita polymer consumption will reach 14kg. While relatively modest by international levels, it will be far higher than 4. kg in 2007, which represented 20% of the global average. Moreover, it will make India the world’s third largest plastics consumer after the US and China. India is ninth in our Asia Petrochemicals Business Environment Ratings, with 61. 8 points, putting it 16. 3 points ahead of Indonesia and 1. 6 points behind Australia. India’s score has recovered in recent months as a result of the continued expansion of the sector as well as a reduction in negative risks associated with the economic downturn and international financial crisis.

Analyzing the Global Petrochemical Industry The petrochemical industry of today is an indispensable part of the manufacturing and consuming sectors, churning out products which include paint, plastic, rubber, detergents, dyes, fertilizers, textiles, and even solvents. The 21st century is seeing a paradigm shift from West to East in the Petrochemicals business, with the Middle East emerging as global production hub with natural advantages of low cost feedstock.

Major consumption centers are shifting to Asia given the rapid growth in demand in China on account of chemical intensive and export driven industry & India emerging as global consumption centers. This trend is likely to also shake up the global petrochemical industry with emergence of National Chemicals and Oil Companies as global players and established western companies having to exit or shrink unless they realign by moving eastwards through partnerships or strategic alliances to be near the consumption centers to catch up with Asia Petrochemical boom.

However, as regional petrochemicals development continues, the industry will face significant challenges relating to energy and feedstock availability and to climate change, particularly carbon dioxide emissions. To sum it up, focus in 2009 remains at construction of olefin projects in Middle East, economic development and demand in Asia Pacific and supply and pricing of petroleum and natural gas. The Global Petrochemical Industry is analyzed in detail by Aruvian’s R’search which presents a very fundamental understanding of the various petrochemical derivatives underlined with their commercial outlook in the global petrochemical industry.

The report also elaborates in detail on the region wise competitive moves and overtures into the global petrochemical industry as well as the emergence of new heavyweights as Asian producers into the top echelons of the global petrochemical industry. The report explains the deepening impact of the current financial crisis which has hit the global petrochemical industry before it has progressed onto the other sectors of the world economies.

In conclusion, the report presents close understanding of the major chemical as well as petro players such as Dow Chemical, DuPont, Total , Exxon , Shell , British Petroleum and others through tools as SWOT analysis and presents in detail the financial performances of the world majors. Overall, Aruvian’s R’search’s report Analyzing the Global Petrochemical Industry is a comprehensive and elaborate study which will equip the reader with a strong fundamental basis of this industry as well as give new insights for further analysis. Scope of India Petrochemical Industry

The scope ofIndia Petrochemical Industry is potentially huge. With the trend in the global market shiftingIndia can become one of the leaders in this industry on a global basis. India Petrochemicals industry is an important member of theIndian economy because it fulfills the need of major industries like textiles, telecoms, power, cables, plastics etc. The competitors in the market are attracted to theIndia petrochemical industry for its benefits. The per capita consumption of synthetic fibers, synthetic rubber, plastics, polymers inIndia is lower than the per capita consumption worldwide.

But interestingly, the growth of the petrochemical industry inIndia in recent times was around 15% whereas the growth in the petrochemical industry globally was only 4%. In the future, there is a huge scope for theIndia petrochemical industry in the global market for petrochemicals and petrochemical-based products. This would make way for the entry of new companies in theIndian market. This industry is divided into 3 basic petrochemicals such as olefins (ethane, propane, and aromatic compounds such as benzene, toluene, intermediate petrochemicals, end products (polymers), synthetic fibers, and synthetic rubber.

As the general trend in the global arena of the petrochemical market has shifted to the Middle East and Asia from the West,India stands a good chance in providing a lucrative market to the world. In the present scenario, the scope ofIndia petrochemical industry is very good as the government regulations are aligned with the industry and is playing an important part. The regulations have opened the market which is full of scope for the rapid growth of the industry and in turn, the growth of the economy. The supply and demand situations and the pricing views in the industry are also among the factors for growth.

With fierce competition in this sector, there is every chance that superb quality products will be produced in order to stay ahead of competitors. The encouragement for investment has been another growth factor for theIndia petrochemical industry. The capacity of different products is in the production, segmentation, and consumption trend of each of the products and so the economies of scale play a very important role in the profit making mechanism of this industry, thereby determining the scope of each of the competitors in the industry. The majorIndian companies in this sector are: Reliance Industries Limited * Gas Authority ofIndia Limited * Indian Petrochemicals Corporation Limited * Grasim Industries Limited * Indo Rama Synthetics Limited India Petroleum Industry * Acetyls * Acrylonitrile * Aromatics * Automobile industry * Automotive Grade Urea * Barauni Petrochemicals * Basic Acrylic Monomer * Basic Chemicals * Bayer ABS * BDO and Derivatives * Benefits of Petrochemical * Building and Construction * Challenges Petrochemical * Cetex Petro * Chemical Intermediates * Chemical Intermediates * Chemical sector * Chemplast Sanmar * Cochin Refineries * Coal Chemicals Communications * Demand and Future * Digboi Petrochemicals * Distribution Network * Electrical Industry * Electronics * Electronic Industry * Environmental Regulation * Environmental Approvals * Environment Friendly * Ethylene Oxide * Finolex Industries * Food Preservation * Food Processing Industry * Foreign Trade in Petrochemicals * Fuel Oxygenates * Future of petroleum * Growth of Petrochemical * Guwahati Petrochemicals * Haldia Petrochemicals * Haldia Petrochemicals * IBP * IG Petrochemicals * Indian Petrochemical Companies * Petrochemical Plants * Petrochemical Market * Petroleum Corporation Inorganic Chemical * Lower Olefins * Mangalore Petrochemicals * Mathura Petrochemicals * Medical Equipment * Methacrylates * Methanol * Methylemines * Uses of Petrochemicals * Mumbai Petrochemicals * Naphtha and Natural Gas * NOCIL * Automation Equipment * Office Furniture * Office Interiors * Opportunities * Organic Chemical * Origin Petrochemical * Panipat Petrochemical * Industry and Environment * Petrochemical applications * Products Overview * Segments Overview * Petrochemicals in Automobiles * Petrochemicals in Healthcaret * Petrochemicals in Offices * Petrochemicals in Transportation Petroleum and Additives * Pharmaceutical industry * Phenol * Phenolic Resins * Pollution Control * Polymers * Price Volatility * Printing Industry * Propylene oxide * Recycling Infrastructure * Reliance Industries * Risk Research * Scope of Petrochemical Industry * Solvents * South Asian Petrochem * Specialty Chemicals segment * SPIC * SRF * Styrene * Synthetic Fiber * Technological Improvements * Textile Industry * Threats Petrochemical Products * Vadodara Petrochemicals Origin of India Petrochemical Industry The origin ofIndia petroleum industry may be traced back to the mid 1800.

DuringIndia’s independence in 1947, the petroleum industry was owned and managed by foreign companies. With the Industrial Policy Resolution of 1954, however, theIndian government placed the petroleum industry at the forefront as a core sector industry. This led to the formation of theIndia Petrochemical Industry. The origin ofIndia Petrochemical Industry was about 70 years ago, with the first production of organic chemical compounds from propane. The term ‘petrochemical’ refers to the chemicals that are formed directly or indirectly from petroleum-based hydrocarbons and natural gases.

Petrochemicals production is one the most vital industries in all developed countries and a growth-determining factor as well. The main purpose of theIndia Petrochemical Industry was to capture the growth in this industry in the future. TheIndia petrochemical industry has regenerated the use of benzene as a petrochemical raw material. At present, around 6% of the total barrel of crude oil is used for the production of petrochemicals. The three major methods involved in the processing of petrochemicals are BTX (Benzene, Toluene, and Xylene) Synthesis Gas (Syn Gas), and Olefins.

They act as basic components for different petrochemical arbitrates and consumer products. Around 80% of the total inventory for petrochemicals is developed from petroleum refinery liquids and gases. The second most important base material is the natural gas. The main end-use products of the petrochemical industry inIndia are: * Plastics and Resins * Pharmaceuticals * Automotive Chemicals including Antifreeze Agents * Detergents, Solvents, Plasticizers, and Paint Varnishes * Agricultural Chemicals such as Fertilizers, Pesticides, and Herbicides * Synthetic Elastomers

Progress of petrochemicals industry inIndia: In the time frame in between the two World Wars, the main raw material for the organic chemical industry was coal. But with the war over, there was a huge demand for aromatic compounds. This led to the setting up of huge automated plants. The war also introduced the synthetic era which were substitutes for inorganic materials like glass, metal, and natural substances like wood, fiber, gums, resins, waxes, rubber, and leather. There was a steep and sudden rise in the demand for fertilizers. Petrochemical Industry Challenges

The challenges facing India petrochemical industry provides the industry with better tools which would in turn help the growth of the economy. India has stably established itself in the core of the international production of petrochemical and petrochemical- related products in the present scenario. With the economic growth cycle slowing down in the United States, the Asian developing nations, especiallyIndia, would ideally fortify its stand in the global petrochemical market as a producer of these products. This is one of the major challenges facingIndia petrochemical industry.

The global economy is a dynamic and ever-growing one in spite of the high cost of energy. This in turn is forging the demand for petrochemicals. The strong growth in demand is not backed by a sufficient supply so the cost is still to come down. Operating rates of major petrochemical product segments are very high presently. In theIndian economy, the petrochemical sector is one of the fastest growing segments which and has a growth rate of around 13% which currently is more than twice the gross domestic product growth. The investments made in theIndia petrochemical industry are huge which bode well for the growth in this segment.

There is a steadfast growth in the production activity of the main petrochemicals and as the result, theIndia petrochemical industry attained self-sufficiency. The dominant part of theIndia petrochemical industry, the segment consisting of polymers is growing at a superb pace, with the middle class household boosting the consumption. Following are the challenges facingIndia petrochemical industry: * High cost of energy and feedstock and the impact on demand * The transformation in the kinetics of competition in manufacturing * Increase in the cost of project

Problems faced by theIndia petrochemical industry: * The manufacturing units mostly use obsolete format of technology and are not able produce optimally * There is a necessity for the modernization of equipments * Excise duty on synthetic fiber should be rationalized * Prevention of reservation on Small Scale Units * Plastic waste to be recycled and the littering habits to be discouraged * India requires advantage on feedstock, so the import cost has to be brought down * The industry should have access to the primary amenities of infrastructure Opportunities for India Petrochemical Industry

The opportunities forIndia petrochemical industry are enormous in the present international scenario andIndia possesses a good potential of becoming a global competitor in this sector. Rapid globalization, changing technology, and modifications in the way business is conducted today, have brought immense changes and enormous opportunities for companies to extend and flourish globally in all kind of industries. Petrochemical and related sectors are no exception to this. The petrochemical industry is a novel industry inIndia but it had played an important role in the country’s change from an agrarian based economy to an industrialized one. There are promising opportunities forIndia petrochemical Industry, which is expected to grow significantly in the future especially since the per capita consumption of synthetic fiber and plastic inIndia is much lower in comparison to the global average. The petrochemical industry inIndia produces more than 20% of the global petrochemical output. The demand facilitators for the petrochemical industry include rapid urbanization, new products introduction, substitution of products, and dynamics of the domestic market.

In order to increase its presence in the global petrochemical industry,India needs to leverage upon the opportunitiesIndia Petrochemical Industry. For this, theIndian petrochemical industry needs to: * Enhance competitiveness to stimulate growth * Unlock its potential The Petrochemical industry seeks to gear up its constitutional strengths with the support of the accessibility of skilled human resource, strong technology base, and great leaps of theIndian information technology. The focus is though export oriented and tapping the unexploited potentials.

To be successful in the efforts of becoming one of the global players, there is a need of being strong in three dimensions: * To be a true marketer by setting up a customer service which would provide services and solutions * To be a leader in cost by setting up international standards manufacturing units and provide economies of scale * To be a leader in technology with a unique product development capability. The government ofIndia has provided satisfactory infrastructure to theIndian petrochemical industry.

As this industry needs a special kind of infrastructure, it is one of the major areas of development for the government to undertake. With the approval of the policy of Investment Regions for the Petroleum, Chemical, and Petrochemical, this has become easier. The infrastructure would act as a gear to the growth of the industry. It would also add the advantage of grabbing the emerging opportunities in the petrochemical sector. Demand and Future Demand and Future of petrochemicals inIndia is heading towards further growth.

The growth statistics of theIndian GDP have been remarkable in the fiscal year 2006-07 which is at 9. 4%. The foreign exchange reserves have surged ahead to USD 200 billion to which Petrochemical investments contributed significantly. | The demand for petrochemicals has increased and many skeptics have been silenced, considering the recent use of petrochemicals in various sectors of the country. The following are the sectors in which demand and future of petrochemicals are heading towards positive growth: * Healthcare * Food preservation * Hardware * Transportation Equipments in office Foreign investments are also being made in the petrochemical industry ofIndia enabling great future prospects in the foreign trade of petrochemicals inIndia. With the rise in demand for petrochemicals inIndia, many barriers to the growth of petrochemicals inIndia have been decreasing during last few years and currentlyIndia is keen on investments in foreign technology for the manufacturing of various petrochemical products. Mega chemical hubs are coming up with view to increasing foreign investments in theIndian petrochemicals market.

The West Bengal state Government for instance, has worked out a new system for setting up five zones in this sector which is expected to bring in investments amounting to USD 17. 4 billion. Other such places include Gujarat, Orissa, and Karnataka. Currently, the size of the petrochemical industry has an estimated turnover of Rs. 450 billion. The following products are in high demand: * Polyvinyl chloride * Polypropylene * Synthetic fibers and rubber * Jet fuel like, kerosene-fuel type * Olefin – ethylene * Polyethylene * Butadiene * Polystyrene

The leaders in this field are Reliance Industries andIndian Petrochemicals Corporation Limited. Both have contributed as much as 65% share in the production of petrochemical crackers. After these, Haldia Petrochemicals and Gas Authority ofIndia deserve to be mentioned. Globally, there is high demand forIndian Petrochemicals and the benefits have been enjoyed by the domestic market since 2004. However, the rising demands for petrochemicals could have been better if the following hindrances could be taken care of: * The pricing of petrochemicals * Increase in use of recycled plastic Slow industrial growth of downstream plastic Demand and future of Petrochemicals inIndia is also subject to the rising productions from neighboring countries like China and Middle East. The future outlook of this industry however, can be seen at a growth rate of 15 percent per annum. It is expected that the supply of Petrochemicals will surpass the demand for related products. Petrochemical Segments Overview A petrochemical segments overview indicates that this sector forms a vital category of the chemicals industry. The petrochemical sector is one of the fastest growing sectors inIndia, growing at 13% yearly.

Petrochemicals is an industry which is highly organized and involves only a handful of companies. In the overview of the petrochemical segments, it is seen that it is highly technology-intensive and demands a great deal of capital investment. In the segments of petrochemical overview, the distribution is done either through distributors or is given to a company directly in large volumes. Also seen in the overview of the petrochemical segments is that the prices of these products are very volatile and depends totally on the international market.

Even though the international prices are not justifiable, theIndian producers are forced to match it. The mainIndian companies in the petrochemical segments are: * In Kolkata the Haldia petrochemical * RIL industries Ltd in Mumbai * In Delhi the Gas authority ofIndia Ltd * In Mumbai the NOCIL * In Mumbai theIndian petrochemical Ltd The petrochemical segments overview covers the various by products of it. They are: * Synthetic rubber such as poly butadiene and styrene butadiene * Polymers such as poly propylene and polystyrene Synthetic fibers such as acrylic fiber and nylon filament * Basic chemicals such as ethylene and propylene * Intermediates such as acrylonitrile and vinyl chloride In the overview of the petrochemical segments, the synthetic rubber is used to manufacture footwear, tubes, and tires. The polymer by product in the petrochemical segment overview forms the raw material for plastic. In the overview of the petrochemical segments, the synthetic fibers are the raw materials for the textile industry. The basic chemicals are important by-products of the petrochemical segment overview since they are the building blocks.

In the petrochemical segment, the intermediates by product is processed further in order to get chemicals of various kinds. In the petrochemical segments overview it can be said that this industry has grown considerably but even then there is still room for development. And this growth in the petrochemical segments can be achieved by the determined efforts of the government ofIndia and the petrochemical companies. Petrochemicals Distribution Network The chief players in the petrochemicals distribution network are NOCIL,Indian Petrochemicals Ltd. (IPCL), RIL Industries Ltd. RIL), Haldia Petrochemicals, Gas Authority ofIndia Ltd. (GAIL). Distribution is done through C&F channels, stockists, sales distributors, and bigger volumes are managed directly by the company. The major distributors of petrochemicals are putting their thrusts in the following key factors: * There is a big gap between the demand and supply of synthetic rubber and detergents * Future possibility of supply of petrochemicals exceeding demand * Aiming at increasing the per capita consumption of petrochemicals * Equipping petrochemical plants with latest technology Setting up new plants to cater to the world at large The distribution of petrochemical industries inIndia is in Panipat, Mathura, Digboi, Guwahati, Barauni, Mumbai, Vadodara, Vishakahapatnam, Mangalore, Chennai, and Haldia. The wide distribution network and the various advancements of the major petrochemical companies like RIL, IPCL, and BPCL have been a key feature of growth this year. Indian Petrochemicals Corporations Limited has the largest distribution network in the country. The company has a huge distribution network and a wide national marketing strategy.

The distribution network is focused on the following areas: * Reliable supply of petrochemicals * Enhanced customer service * Maintaining quality in its products * Technical Support * After sales service All these thrust areas of the distribution network of gives the company an upper hand in the market over all other petrochemical companies. At the same time it is cautious of the other top most competitors in the line. The new complex at Gandhar has increased the capacity of IPCL. The future goals of the company are to leverage its marketing and distribution segment.

This in turn, will increase market penetration in the area of its petrochemicals. The key to success in the distribution chain is the establishment of long term relationship with its customers. Reliance Industries Limited: RIL has a network of more than 60 distributors and agents for the distribution of polypropylene. It caters to more than 3000 worldwide customers and is focused on the establishment of excellent customer service. RIL caters to chief countries like Europe, China, Japan, and the Middle East. The core area of the distribution network of RIL is in establishing continuous rapport and relationship with the customer.

There are professional teams offering technical solutions as well. As such, there is rapid growth in the distribution network of petrochemical industries inIndia and the Government is looking forward to major investments from foreign companies. Price Volatility of Petrochemical Industry The global petrochemicals industry has been affected by rise in price volatility for years. Prices are less stable and are difficult to predict in recent times. As a matter of fact, the uncertainty in prices of petrochemicals has affected the development of the petrochemicals market ofIndia on a global front.

The chief reason for such unstable prices is the change in crude oil prices. The market of petrochemicals inIndia on the global front is fairly large. The foreign pharmaceutical trade is directed towards Middle East and China at large. The large volatility in prices has called for implementation of risk management. Though price volatility in the petrochemical market is highly unpredictable, there lies a thin glimmer of hope during the spring and winter seasons inIndia which is due to the constraint of the available supply. Unfortunately, that is just a small ray of hope for the petrochemical markets in the area of price volatility.

The rising trend of petrochemical prices is exemplified through the rise of ethylene prices, indicated by the following statistics: * 2000 – 5 % * 2002 – 9 % * 2004 – 14 % Similar record of volatility in prices of benzene is registered as 13% in 2005. The prices of petrochemicals are subject to the variations in prices of energy commodities, which results in price volatility. The amazing thing about the prices of petrochemical is that previously, they were believed to be based on the prices of the finished goods for which they were used in but now they are sensitive to crude oil prices.

No doubt the size of the petrochemical market is smaller than the oil market and this gives the petrochemical market the edge in increasing individual spot transactions. This further aggravates the situation of price volatility. There is a sense of low transparency in the prices of petrochemicals. Apart from the effect of prices of oil market, another major reason for price volatility, is the global Petrochemical market. China is emerging as a major buyer of Petrochemicals. The industry there is growing rapidly which in turn has contributed to increase in global demand of petrochemicals.

Interestingly, the middle-east has a major share in the supply of ethylene derivatives. The region accounts for the highest amount of surplus in this regard amounting to 7 million mt. So price volatility is here to stay considering the fact that the petrochemicals market is currently facing a huge boom. As such, price volatility has been affected to a certain extent by sophisticated and new buyers. These buyers are demanding more value added products and are keen on the quality, also increasing their contracts at the same time. Suggestions for controlling price volatility have been worked on lately.

They include floors, swaps, cost collars, virtual integration, and caps. Solvents of Petrochemical Industry Solvents are organic chemicals and form an important part of theIndian petrochemical industry. Being an organic chemical it contains as its important constituents oxygen, hydrogen, and carbon. A solvent is usually used to dissolve a liquid, gaseous or solid solute which results in a solution. The industry of solvents is going through sluggish growth. For being an intermediate, the demand for solvents is dependent totally on the industry of end user.

That is the reason that the industry of solvents is suffering from built up capacity which is in excess. The solvents industry is highly technology intensive and so requires a lot of capital investment. The solvents industry is highly organized for it has only a limited number of companies operating within it. At present, the industry is dominated by PSUs and private companies. The different kinds of solvents are sold to OEMs directly and also through the distribution channels which consist of dealers and stockists. They address the smaller segments or the market of retail.

Solvents are highly flammable and also they evaporate easily. So the production, trans portion, and use of them requires careful handling. And this to a certain extend also contributes in increasing the cost of the solvents. The prices of solvents are highly volatile for it is totally dependent on the international market. Even when it is not economically justifiable, the producers are forced to match the prices with the international market. The various kinds of solvents are: * Turpentine * Petrol ether * Acetone * Methyl acetate * Toluene * Ethyl acetate * Hexane

The various uses of solvents are: * Paint thinners * Dry cleaning * Spot removers * Perfumes * Detergents * Chemical syntheses Sales of solvents have not increased as have been expected. Efforts must be made by theIndian government and the petrochemical industry ofIndia so that this industry registers growth in the coming years. Benefits of Petrochemical Products This site provides detailed information on the Benefits of Petrochemical Products. It also focuses on other factors that contributed to the growth of Petrochemical Industry and reducing Environment pollution.

In today’s jet fast life the Benefits of Petrochemical Products does not need to be mentioned. The Benefits of Petrochemical Products are profound in our daily life and without it this world would come to a stand still. InIndia the Department of Chemicals & Petrochemicals, GOI are the concerned highest authority of theIndian Petrochemical Industry and Environment related issues. TheIndian Petrochemical Industry and Environment related issues are well addressed to suit the needs of the country.

TheIndian Petrochemical Industry is at par with world standard. Thus,India share a good portion of Petrochemical business in world market. Asian countries, African countries and even Arab world buysIndian Petrochemical products. The demand forIndian Petrochemical products is high mainly because of its quality and competitive pricing. India’s low cost and high end Petrochemical products manufacturing expertise coupled with developing world class infrastructure is the main leveraging factor for the rise of this industry.

India offers Petrochemicals at a substantial discount than its western counterparts while delivering the same grade of output. TheIndian Petrochemical products are – * Fiber * Cotton * Cellulosics * Synthetics * Acrylics * Polyamides * Polyester * Wool * Elastomers * Polymers * Surfactants Uses and final products of Petrochemicals are – * Paints * Alkyd Resins * Industrial De-greasers * Odorless Thinners * Inks * Construction Chemicals * Dry Cleaning * Cleaning chemicals * Maintenance Chemicals * Insecticides * Insecticides Aerosols * Agricultural pesticides Paints * Thinners * Charcoal Lighters * Oil drilling The advantages of manufacturing high class Petrochemical Products inIndia are – * Friendly Government ofIndia policies * Low cost labor * Low and world class infrastructure * Strong technical education * Large number of science and engineering graduates * Quality output * Highly skilled workforce * Usage of innovative process * Good client relationships * Huge scope for innovation * Expansion of existing relationships * Huge demand in overseas markets * Availability of more technical work force Increased number and quality of training facilities Strengths ofIndian Petrochemical industry – * Large and very fast growingIndian petrochemical market * Huge trained talent pool * Competitive labor cost Weaknesses ofIndian Petrochemical industry – * Insufficient basic infrastructure for the petrochemical industry * High feedstock cost in comparison to Middle East countries * Prevalence and use of old technology * Synthetic fiber industry is unorganized and operates in small clusters Opportunities inIndian Petrochemical industry – Huge demand for polymer and synthetic fiber * Great opportunity for product development exists * Low consumption of polymer in comparison to global consumption rate Threats toIndian Petrochemical industry – * Stiff competition from other regional players like, china and the Middle East countries * Stiff rational pricing pressures * Environmental hazards concerns * Low market recognition * Relocation of manufacturing sites to region with abundance of feedstock Notable points of theIndian Petrochemical industry – * Represents 2% of world market * Does business worth USD 30 billion Rate of growth of theIndian petrochemical industry is 10% * Profit incurred is around 14% * Wide variety of products * Basic components are petrochemicals, inorganic chemicals and fertilizers * TheIndian states of Gujarat, Maharashtra, West Bengal and Andhra Pradesh have the largest concentration of chemical and petrochemical units Threats posed by Petrochemical Products This site provides detailed information on the threats posed by petrochemical products. It also focuses on other factors that governs the Petrochemical Industry and addresses Environmental concerns.

The Department of Chemicals & Petrochemicals, GOI are the concerned highest authority to deal with the threats posed by petrochemical products. The threats posed by petrochemical products are well addressed by theIndian Environmental Regulation acts and rules. TheIndian regulation for the protection of environment is at par with world standard. The Threats posed by Petrochemical Products are by – * Wastes of cyanides * Metal waste matter * Water soluble wastes like lead, copper, zinc, chromium, nickel, selenium, barium and antimony * Mercury, arsenic, thallium, and cadmium * Non-halogenated hydrocarbons Halogenated hydrocarbons * By products during manufacture of paints, pigments, glue, varnish, and printing ink * By products during manufacture of Dyes and dye intermediates containing inorganic chemical compounds * By products during manufacture of Dyes and dye intermediates containing organic chemical compounds * Waste oil and oil emulsions * Tarry wastes from refining and tar residues from distillation or pyrolytic treatment * Sludges of wastewater containing heavy metals, toxic organics, oils, emulsions, and spent chemicals, Incineration ash Phenols * Asbestos By products during manufacture of pesticides and herbicides and residues from pesticides and herbicides formulation units * Acid/ * Alkali * Slurry wastes TheIndian Environmental Acts and Rules that are in place to negate the Threats posed by Petrochemical Products, are – * The Water (Prevention and Control of Pollution) Act, 1974 * The Water Prevention and Control of Pollution Cess Act, 1977 * The Air (Prevention and Control of Pollution)Act, 1981 * The Environment (Protection) Act, 1986 The Batteries (Management and Handling) Rules, 2001 * The Municipal Solid Wastes (Management and Handling) Rules, 2000 * The Recycled Plastics Manufacture and Usage Rules, 1999 * The Rules for the Manufacture, Use, Import and Export and Storage of Hazardous micro-organisms * Genetically engineered organisms or cells, 1989 The Manufacture, Storage and Import of Hazardous Chemical Rules, 1989 * The Hazardous Wastes( Management and Handling ) Rules, 1989 * The Bio-Medical Waste ( Management and Handling ) Rules, 1998 * Dumping and disposal of fly ash discharged from coal or lignite based thermal power plants on land, 1999 * Noise Pollution( Regulation and Control ) Rules, 2000 * The Ozone Depleting Substances ( Regulation and Control )Rules, 2000 * The 2-T Oil ( Regulation of Supply and Distribution) Order, 1998 * The Public Liability Insurance Act, 1991 The National Environment Appellate Authority Act, 1997 * The National Environment Tribunal Act, 1995 * Forest (Conservation) Act, 1980 * The Biological Diversity Act, 2002 Threats toIndian Petrochemical industry – * Environmental hazards concerns * Disposal concerns * Industrial effluents are disposed off openly into water bodies and thus contaminating ground water level * Low quality consciousness * Insufficient safety measures * Safety norms are not at par with world standard Insufficient basic infrastructure for the petrochemical industry * Prevalence and use of old technology * Unorganized industry and operates in small clusters TheIndian Environmental Regulation are as per International standards and are adherent to the Kyoto protocol. And the Hazardous Waste Management process followed inIndia is at its nascent stage and the government ofIndia is trying hard to bring it at par with world standard otherwise the process of industrialization inIndia will lose its pace. Uses of Petrochemicals

Multifaceted uses of petrochemical ranges from day to day trivial products to high range products. Petrochemical commodities start ranging as something from as mundane as plastic carry bags to explosives. If we analyze the role of petrochemicals in the petrochemical industries, we find that the petrochemical industry relies heavily natural gases or petroleum as their raw materials. Oil is one of the most important petrochemical products since it is the main constituent of petrochemicals. So, almost every item ranging from a carpet to electrical goods are made up of petrochemicals.

Synthetic (a petrochemical product) has numerous uses – it is done by refining petroleum. This is a man-made petrochemical which often serves as the raw material for wrinkle-free garments. These fibers can be further finely woven tapestry, carpets, curtains, and many other things. Petrochemical is also used as fertilizers. Fertilizers like pesticides are used to protect crops from any sort of damage and increase crop production. Wax, also a by-product of petroleum, is used to make candles and mold various show pieces, polishes, and milk cartons.

Detergent, a petrochemical product is also used in every day life. It has been categorized into 2 types – soapless and the soapy variety. The range of soap less detergents is generally the liquids and the powders. Detergents have oils, alcohol (a petrochemical product) or petrochemicals as their ingredients. Food-additives are another major kinds of petrochemical which are known to act as preservatives and increase the tenure of freshness of canned food, so that the freshness of food can be enjoyed anywhere at any point of time.

Petrochemical also stretches itself to the production of Vitamins like the ASA (Acety salicylic acid). Sneakers (synthetic shoes) have also got petroleum products as their content. The rubber soles are made keeping in mind that they retain the same flexibility in all form of weather unlike natural rubber which expands when cooled and contracts when heated. The non-stick pads made to plaster wounds are also a petrochemical product. Today, the medical industry has improved its standards by leaps and bounds and petrochemicals have served as a boon to this sector.

Dyes which are very familiar petrochemical products have various colors especially the color of the ink used in the pens. Plastic bottles are made from petrochemicals too. Polyester is used in the making of most plastic commodities. Besides this, compact discs and cassettes are made up of polyester or petrochemical oil. Ethylene (a by product obtained by heating or distilling the oil) is the most essential constituent of petrochemical oil and is used to make garbage bags, camera films, milk crates, bags etc. Thus, petrochemicals have enormous uses.

The petrochemical products are used in every nook and corner of the world ranging from household applications to the massive industrial production taking place across the world. Growth of India Petrochemical Industry Growth ofIndia petrochemical industry is playing a major part in the growth of the economy and the development of the manufacturing sector. The petrochemicals industry provides more value addition to theIndian economy than most of the other companies. Petrochemicals are obtained from different chemical compounds which are by-products of crude oil refining.

Most of them fall may be categorized into hydrocarbons. With the fractional distillation of the crude oil, chemicals like naphtha, kerosene, petroleum gases, ethane, methane, propane, and butane are the primary stocks used in the petrochemical industry for the production of various other chemical compounds. Presently, the extent of penetration of the petrochemical products in day-to-day use is vast. It actually covers most of the domain of existence such as apparels, accessories, household items, furniture, electronics, construction, housing, automobiles, medical appliances, packaging, horticulture, and agriculture.

TheIndia petrochemical industry originated in the 1970s and entered the arena of the industries ofIndia. This sector was subjected to rapid growth in the period between the 1980s and 1990s. Even today, expectations from this sector are sky-high. TheIndian petrochemical industry for it part is doing very well and has been contributing significantly to the country’s GDP fro several years now. TheIndia petrochemical industry primarily consists of synthetic rubber i. e. elastomer, yarn of synthetic fiber, synthetic detergent intermediates, performance plastics, plastic processing industry, and polymers.

The Bongaigaon refinery was set up as an experimental one with the capacity of a refinery and a petrochemical unit. The success of this integrated petroleum refinery-cum-petrochemicals unit led to a spree of activities in this sector. Many such units were established to boost production capabilities. With the growth ofIndia petrochemical industry, it holds the share of around 20% of the total global produce of petrochemical related products. In the present scenario, 5 naphtha and 3 gas cracker coordination compounds are in operation with ethane production capability of around 2. million tons every year, jointly. Along with this, another 4 aromatic coordination compounds are in operation with a xylene production capability of around 2. 1 million tons. Indian Petrochemicals Corp (IPCL) Indian Petrochemicals Corp (IPCL) was set up in 1969 and is a leading petrochemicals company in India. The Indian Petrochemicals Corp. Ltd. was established with the aim of encouraging promoting the use of plastic in India. Indian Petrochemicals Corp’s business includes fiber intermediaries, polymers, catalysts, polyesters, synthetic fiber, solvents, industrial chemicals, and surfactants.

The Indian Petrochemicals Corp Company has 3 complexes for petrochemicals manufacture – a naphtha-based complex in Vadodara, and gas-based complexes at Nagothane and at Dahej. At Vadodara, the Indian Petrochemicals Corp. also operates a manufacturing unit for catalysts. The Petrochemicals Indian Corp. had a production capacity of 66,000 tons when it was set up but the manufacturing capacity of the company’s units has since been upgraded as a result of adopting the latest technologies. As a result, the production capacity has been increased to more than 1 million tons.

The company also has centers for technology management, research, products application, and customer relations. All these centers have helped the Indian Petrochemicals Corp. to continuously improve its products and processes. The Indian Petrochemicals Corp. ‘s turnover amounted to US$ 2 billion in 2005- 2006. The board of the company comprises of 5 non-independent and 5 independent directors. In 2002, the Indian government divested 26% shares that belonged to it in favor of Petroinvestments Reliance Ltd. which is a company under the Reliance Group.

Reliance Petro-investments Ltd. further acquired 20% shares in Indian Petrochemicals Corp. As a result, Reliance holds around 46% share of Indian Petrochemicals Corp. Indian Petrochemicals Corp. has grown by a large margin its inception. This has been possible due to the fact that it has strictly maintained the high quality of its products and thus has been able to sustain and increase its customer base. ONGC, India Corporate Details Oil and Natural Gas Corporation Limited ( ONGC India) is considered Asia’s best Oil & Gas company .

It ranks as the 2nd biggest E&P company (and 1st in terms of profits), as per the Platts Energy Business Technology (EBT) Survey 2004. It ranks 24th among Global Energy Companies by Market Capitalization in PFC Energy 50 (December 2004). ONGC was ranked 17th till March 2004, before the shares prices dropped marginally for external reasons. Activities Everyone who works at ONGC India is responsible for protecting the environment, health and safety of our people and communities worldwide. Our commitment to SHE performance is an integral part of our business, and achieving cost-effective solution is essential to our long-term success.

The dedication to the causes of environment and safety in ONGC is amply demonstrated by the fact that a separate institute named Institute of Petroleum Safety, Health and Environment Management (IPSHEM) had been set up way back in 1989 to deal with these issues. Oil and Natural Gas Corporation Limited ONGC ‘s safety policy seeks to provide safe and healthy working conditions and enlist the active support of all staff in achieving these ends. The development activities of ONGC has been planned on sound ecological principle and incorporates appropriate environmental safeguards.



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