India's Polymer Industry To Grow 40% by 2011

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Researched by Industrial Info Resources (Sugar Land, Texas)--Buoyed by an increase in the consumption of plastics, India's $8.8 billion petrochemical industry is planning to ramp up polymer production by 40% in the next three years. About 10 petrochemical firms are making an aggregate investment of $35 billion in projects scheduled for completion between 2008 and 2011 to boost domestic manufacturing capacity from 5 million tons per year to 7 million tons per year by 2011. The proposed capacity expansion augurs well for plastic-product manufacturers who currently import 20% of the required raw material for downstream plastic processing.

At the forefront of the proposed expansion is Reliance Industries Limited (BOM:500325) (Mumbai), which is setting up a 900,000-ton-per-year polypropylene unit in Jamnagar, Gujarat, with an investment of $6.25 billion. The unit is scheduled to be commissioned by 2009-10. Reliance will also set up an ethylene unit and other petrochemical production facilities of an aggregate capacity of 2 million tons per year with an additional investment of $3.4 billion.

Oil & Natural Gas Corporation Limited (BOM:500312) (ONGC) (New Delhi) is setting up a petrochemical complex in Dahej, Gujarat, with an investment of roughly $1 billion. The complex will consist of a cracker unit with a dual-feed capacity of 1.1 million tons per year and downstream polymer plants. The complex will produce high-density polyethylene, linear low-density polyethylene, polypropylene and styrene butadiene rubber. It is also setting up a $250 million ethane and propane (C2-C3) extraction plant to provide additional feedstock to the petrochemicals complex for the manufacture of polymers. The project is scheduled to go on stream by 2012. ONGC is also setting up one of the largest petrochemical complexes in southern India with integrated refinery and aromatic units to produce 900,000 tons per year of paraxylene and 275,000 tons per year of benzene. The plant is scheduled to be commissioned by the end of 2010.

Brahmaputra Crackers & Polymers Limited (Guwahati, Assam) is setting up a petrochemical complex in Lepetkata, Assam, in the Dibrugarh district. The project is scheduled for completion by 2012 and will produce 220 million tons per year of high-density polyethylene and linear low-density polyethylene, and 60,000 tons per year of propylene. The complex will also produce 12,500 tons per year of fuel oil and 55,000 tons per year of raw pyrolysis gasoline. Brahmaputra Crackers has signed an agreement with ONGC for a supply of 1.35 metric million standard cubic meters per day of natural gas for the project until March 2012. Brahmaputra Crackers is a joint venture company between GAIL India (BOM:532155) (New Delhi), Oil India Limited (Noida), Numaligarh Refinery Limited (Golaghat, Assam) and the state government of Assam.

In April, Essar (Mumbai) announced plans to set up a polypropylene unit in Jamnagar with an investment of $5.3 billion. The project is expected to produce Euro II- and Euro III-compliant grades of diesel and petrol, as well as heavy crude oil. Indian Oil Corporation Limited (BOM:530965) (New Delhi) is setting up a 15 million-ton-per-year refinery and petrochemicals complex in Paradeep, Orissa, with an investment of $6 billion. The project is scheduled to be commissioned by October 2011.

Haldia Petrochemicals (Haldia, West Bengal) is undertaking a 400,000-ton-per-year expansion project in West Bengal with an investment of $190 million. Chemplast Sanmar Limited (Chennai, Tamil Nadu) is setting up a 150,000-ton-per-year polyvinyl chloride unit in Cuddalore, Tamil Nadu, for $135 million. Bharat Petroleum Corporation Limited (BOM:500547) (Mumbai) is setting up a 50,000-ton-per-year propylene unit in Kerala for $16 million.

The polymer industry has attracted investments from several international players. Lanxess AG (FRA:LXSG) (Leverkusen, Germany), which manufactures styrene acrylonitrile and acrylonitrile butadiene styrene in India through its subsidiary Lanxess ABC Limited (Vadodara, Gujarat), plans to invest $200 million to build a greenfield chemical facility in Gujarat. Japan Polychem Corporation, a subsidiary of Mitsubishi Chemical Corporation (Tokyo, Japan), is developing a 15 million-ton-per-year polypropylene-based resin plant in Rajasthan for $15 million. The plant is scheduled to come on stream in April 2009. Mitsui Prime Advanced Composites Limited (New Delhi), a wholly owned subsidiary of Mitsui Chemicals Incorporated (Shimbashi, Tokyo), is building a 15,000-ton-per-year unit to manufacture polypropylene compounded resins for use in the automobile industry. The project is being implemented in Neemrana, Rajasthan, with an investment of $22.5 million. Earlier this year, DuPont (NYSE:DD) (Wilmington, Delaware) set up its first research and development center in India in Hyderabad with an investment of $37.5 million. The DuPont Knowledge Center plans to employ 300 engineers and scientists in its first year of operations.

The Indian polymer industry registered a growth rate of 15% in the last fiscal year. The polyolefin segment grew by about 20% with consumption of 4.1 million tons and accounted for more than 60% of the total polymer consumption in the country. Consumption of polyvinyl chloride was at 1.4 million tons, and 225,00 tons of engineering thermoplastics and 350,000 tons of thermosets were consumed last year. The total consumption of polymers for application in plastics was nearly 7 million tons in the last fiscal year.

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