INDIAN CHEMICAL INDUSTRY
– Current Status
S.R. LOHOKARE, Managing Director, National Peroxide Ltd. Mr. S. R. Lohokare, Chairman-Western Region and ChairmanTechnology & Energy Expert Committee of Indian Chemical Council recently participated in the EU – INDIA Meeting held at Barcelona. The paper presented by Mr. Lohokare at the meeting highlights the current status of the industry and we hope the readers will find it very informative.
T
he Chemical industry is one of the world’s largest. In 2008, its sales exceeded 3 trillion USD. More than 20 million people around the globe have a job connected to Chemical industry (directly or indirectly). Chemical products and technologies are used in almost every area of the world economy. As the global economy grows, it increases the demand for the chemical industry’s products. This growth drives product innovation and the industry creates new products every year while striving to improve production process and use resources more efficiently. The escalation of crude oil prices, demanding international environment protection standards and climate change have posed major challenges to the chemical industry. Clean Development Mechanism (CDM) has provided an impetus to reduce the greenhouse gas emissions in the developing countries particularly in the chemical industry. The Indian Chemical industry is one of the oldest industries in India and contributes significantly to the industrial and economic growth of India. It is thus an important constituent of Indian economy. Its size 10 z chemical news july 2010
is estimated at US $ 35 billion approximately by the Department of Chemicals and Petrochemicals which is a part of the ministry of Chemicals and Fertilizers. It also gives the market value segmentwise as under Segment Market value (Billion USD) Basic Chemicals 20.00 Speciality Chemicals 9.00 High end/knowledge segment 6.00 TOTAL 35.00 This paper makes an attempt to determine the size of the chemical industry in India. The estimates as per this report put the size of the industry at USD billion with the following segmentwise distribution : Segment Market value % Billion (USD) Basic Chemicals 32.78 49.05 Speciality Chemicals 16.50 24.69 High end/knowledge segment 17.55 26.26 TOTAL 66.83 100.00 Thus the chemical sector contributes to 5.03% of India’s GDP and 20.87% of the industrial sector by value.
1.0 Industry overview
The Indian Chemical Industry is ranked 12th largest in terms of volume and 3rd largest in Asia. It is growing annually at over 10%. Since liberalization the Indian Chemical industry has evolved from being a basic chemical producer to becoming an innovative industry. With investments in R&D, the industry is registering significant growth in the knowledge sector comprising of speciality chemicals, fine chemicals and pharmaceuticals. It is one of the most diversified of all industrial sectors offering more than 70,000 products. Total exports from India during 2008-09 and 200910 were 185.295 billion USD and 176.575 billion USD respectively. Export of chemicals and related products were 24.066 billion USD in 2008 – 09 amounting to 13.63% of the total exports. Total imports during 200809 were 303.696 billion USD. Of this, Chemical sector imports were 28.19 billion USD amounting to 9.28%. The Indian Chemical Industry has come out of its protected market since liberalization. Although the maximum customs duty is 7.5% as a result of number of Free Trade Agreements (FTAs) signed recently the actual duty protection to the chemical industry is significantly lower.
The characteristics of the Indian Chemical Industry:
develop and per capita consumption levels increase z High degree of fragmentation and small scale of operations z Limited emphasis on exports due to domestic market focus and smaller scale operations z Low cost competitiveness as compared to other countries due to high cost of feedstock and power taxation structure and cost of capital z Low focus on R&D despite initiatives to innovate processes to synthesis products cost effectively.
Segments of the Indian Chemical Industry The chemical industry has three key segments and many smaller segments. They are: 1. Basic Chemicals 1.1 Inorganic Chemicals 1.2 Petrochemicals 1.3 Fertilizers 1.4 Other industrial chemicals 2. Speciality Chemicals 2.1 Paints and varnishes 2.2 Textile Chemicals 2.3 Dyestuffs and Intermediates 2.4 Catalysts 2.5 Plastic Additions 2.6 Adhesive sealants 2.7 Industrial Gases 3. Knowledge Chemicals 3.1 Pharmaceuticals 3.2 Biotechnology 3.3 Agrochemicals The common characteristics and constituent industries are shown in Table 1. Diagram 1 is pi diagram of the segments of the Indian Chemical Industry.
Diagram 1 segments of the indian chemical industry knowledge 26.26% basic 49.05%
speciality 24.69% basic
speciality
knowledge
z High domestic demand potential, as the Indian markets chemical news july 2010 z 11
Table 1 Segments Basic
Speciality
Knowledge
Characteristics High volume, low value added Limited product differentiation across manufacturers High entry barriers on account of high capital requirements and stringent regulations High product differentiation and value addition Typically smaller production units with more flexibility Low capital investment levels Differentiated chemical and biological substances used to induce specific outcomes in humans, animals, plants and other life forms High investment in R&D and marketing
Basic Chemicals and Chemical Products (except products of Petroleum and coal) is a sub-group of manufacturing sector in the Index of Industrial Production (IIP). The sub group includes chemicals, petrochemicals, drugs, fertilizer, paints, gases, cosmetics, etc. It has a 14% weight in the general index of Industrial Production. The compounded annual growth rate (CAGR) in IIP for the basic chemicals and Chemical Products for the period 2002-03 to 2009-10 works out to 9.4% as against 8.65% for manufacturing and 8.07% for general index of IIP. Figure 2 shows the trends in IIP. 2.0 Basic Chemicals 2.1 Inorganic Chemicals Alkali chemicals constituted 91.39% of the total volume of inorganic chemicals and 71.06% by value in 2008-09.
Figure 2
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Constituent Industries Petrochemicals Fertilizers Inorganic chemicals Other industrial chemicals Adhesive sealants Catalysts Industrial gases Plastic additives Agrochemicals Pharmaceuticals Biotechnology
2.1.1 Caustic Soda Industry 2.1.1.1 Caustic Soda There are 35 producers of Caustic Soda in the country. The major producers among them are Gujarat Alkalies and Chemicals Ltd., Aditya Birla Group, DCM Sriram Consolidated Limited and Reliance Industries Ltd. Caustic Soda production and sales during 2008-09 amounted to 2.18 and 2.10 million tons. The average price realization was Rs.19,683/- per ton (419 USD/ton). Total imports during 2008-09 amounted to 0.18 million tons. The industry had an internal consumption of 0.095 million tons. The domestic consumption increased by 10% during 2009-10, in which domestic production is estimated at 2.32 million tons with consumption at 2.36 million tons. Between FY 2009 to FY 2012 the demand is estimated to grow at 9.0% per annum.
FY 09 FY 12 MMTPA MMTPA Capacity 2.80 3.06 Production 2.18 2.55 Demand 2.28 2.95
CAGR % . 3.0 5.4 9.0
Demand growth in Alumina is expected to drive Caustic Soda demand. 2.1.1.2 Chlorine As per Department of Chemicals and Petrochemicals Liquid chlorine sales is estimated at 70% of the Caustic Soda Production. The rest is used for the manufacture of Bleaching Powder, Hydrochloric Acid, PVC and Chloromethanes. The total Chlorine demand is estimated to grow at 7.76% per annum. 2.1.1.3 Caustic Soda and liquid chlorine Based on the sales of Caustic Soda and liquid chlorine the market size of the industry is estimated at 1.063 billion USD in 2008-09 as per calculation below : Sales Million Rs/Ton Billion Billion Tons Rs $
Caustic Soda 2.38 19683 45.66 Chlorine 1.67 2600 4.33 Total
0.971 0.092 1.063
The value added chemicals such as chloromethanes and PVC are considered separately. The industry is affected by large scale imports. Hence safeguard duty was levied for imports from China, Indonesia, Qatar, Saudi Arabia and Thailand. 2.2.1 Soda Ash There are 5 main producers of Soda Ash. Of them Tuticorin Alkalies Chemicals and Fertilizers Ltd. did not produce any quantity during 2008-09. Soda Ash sales and production during 2008-09 amounted to 1,898 KT and 2,032 KT (gross basis) as per annual reports of producing companies. Captive consumption of Nirma of 110 KT is included in the sales tonnage. Outlook of the Soda Ash industry is as under :
FY 2009 FY 2012 (E) KTPA KTPA Capacity 2990 3330 Production 2030 2700 Demand 2330 2730
CAGR % 4 10 5
During FY 2010 the demand grew by 12.31%. However, the sales of local producers marginally increased. Imports met the increase in demand. Statistics of the industry is shown in Annexure I. 2.2.2 Sodium Bicarbonate Capacity Production Sales Sales value KT KT KT Rs. billion 126 110 108 175.30 2.2.3 Soda Ash and Sodium Bi Carbonate Based on the sales of Soda Ash and Sodium Bi Carbonate the market size of the industry is estimated at 0.70 billion USD in 2008-09 as per calculation below : Sales Sales Billion /KT Realization Rs Rs/T
Billion $
Soda Ash 1898 16,344 Sodium Bicarbonate 108 16,218 Total
0.664 0.037 0.701
16428 16218 32.93
2.3 Other Inorganic Chemicals The total size of other inorganic chemicals amounts to 0.672 billion USD by value and 555 KT by volume. Of this Carbon Black alone is 0.523 billion USD i.e 77.83% by value and 74.60% by volume. Other important chemicals in this segment in Titanium dioxide amounts to 0.100 billion USD i.e 14.88% by value and 9.58% by volume. There are other chemical such as Sulphuric Acid, Hydrochloric Acid, etc. However, their value is considered in downstream chemicals. 2.3.1 Carbon Black The sales and production volume of Carbon Black during 2008 – 09 was 414 KT and 414 KT. The sales value is Rs.2455.78 crores i.e 0.52 billion USD.
ANNEXURE I: SODA ASH PRODUCER ANNUAL PRODUCTION PRODUCTION SALES CAPACITY (MT) FY 2010 (MT) FY 2009 (MT) FY 2010 (MT) TCL 917,700 766,886 770,539 581,281 GHCL 850,000 679,450 618,102 468,825 NIRMA + SAUKEM 1,015,000 633,263 642,186 448,374 DCW 96,000 85,744 81,972 80,762 TAC 115,000 SUB-TOTAL 2,993,700 2,165,343 2,112,799 1,579,242 IMPORT GRAND TOTAL 2,993,700 2,165,343 2,112,799 1,579,242
SALES FY 2009 (MT) 591,685 487,445 412,947 65,962 1,558,039 420,604 1,978,643
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2.3.2 Titanium-di-Oxide The production volume of TiO2 during 2008-09 was 53 KT. Sales of all producers were not available. The value of production is Rs.4.713 billion i.e 0.100 Billion USD. 2.3.3 Others Annexure II details other chemicals and their value. Potassium Chlorate in this segment is in the small scale sector and under severe threat from imports from China. If corrective steps are not taken, India may no longer produce this product. The total size of others is estimated at USD 0.049 billion.
ANNEXURE II INORGANIC CHEMICALS - 2008-09 TONNAGE RS./TON RS. CR US $ BN CARBON BLACK 414380 59264 2455.78 0.523 CALCIUM CARBIDE 66551 12270 81.66 0.017 TITANIUM DIOXIDE 53244 88521 471.32 0.100 ALUMINIUM FLUORIDE 15069 83343 125.59 0.027 POTASSIUM CHLORATE 5790 45009 26.06 0.006 RED PHOSPHOROUS 461 234924 10.83 0.002 TOTAL 555495 523331 3171.24 0.675
Based on the above, the total size of the inorganic chemicals is estimated at USD 2.44 billion. 2.5 Organic Chemicals As per Department of Chemicals Ministry of Petrochemicals, the total production of Organic Chemicals during 2008-09 works out to 1.25 million tons as shown in Annexure III with a value of USD 0.917 billion. Some of the chemicals such as methyl amines and methanol amines etc. have not been considered in the analysis as they are not considered in Department of Chemicals & Petrochemicals Statistics. 2.6 Fertilizers There are 128 plants in India. These produce Fertilizers of the following type : Urea - 31 (28 operational) Complex Fertilizers -19 (including 11 DAP Plants) Single Super Phosphate (SSP) - 66 Others (Ammonium Sulphate, etc) - 12 Major producers as IFFCO, National Fertilizers Limited, Kribhco, RCF and Tata Chemicals.
2.4 Summary The above can be summarized as under : Caustic Soda Soda Ash Other Inorganic Chemicals TOTAL
Billion US $ 1.063 0.701 0.672 2.436
ANNEXURE III: ORGANIC CHEMICALS - 2008-09 TONNAGE RS./TON RS. CR US $ BN ACETIC ACID 203,336 30,632 623 0.133 ACETIC ANHYDRIDE 36,144 61,388 222 0.047 ACETONE 46,832 49,485 232 0.049 PHENOL 75,747 63,639 482 0.102 METHANOL 237,664 19,816 471 0.100 FORMALDEHYDE 231,838 9,391 218 0.046 NITROBENZENE 13,927 52,000 72 0.015 MALEIC ANHYDRIDE 2,974 75,319 22 0.005 PENTAERITHRITOL 13,823 123,852 171 0.036 ANILINE 29,671 72,943 216 0.046 CHLOROMETHANES 96,220 22,429 216 0.046 ISOBUTYLENE 3,335 96,012 32 0.007 NITROAROMATICS 49,061 43,894 215 0.046 ACETALDEHYDE 108,071 42,000 454 0.097 ETHANOLAMINES 12,309 120,083 148 0.031 ETHYL ACETATE 93,219 55,023 513 0.109 1,254,171 34,301 4,302 0.917 14 z chemical news july 2010
During 2008-09 the industry statistics were as under : Capacity Production Imports Consumption Million tons Million tons Million tons Million tons N 12.29 10.90 4.19 15.09 P(as P2O5) 5.89 3.40 3.11 6.51 K (as K2O) - 3.31 3.31 The production, consumption and import of urea and DAP during 2008-2009 and projections is as under : Year Production Consumption Import Million MT Million MT Million MT Urea DAP Urea DAP Urea DAP 2008-09 19.92 2.99 26.65 9.23 5.67 6.19 2009-10 (P) 21.12 4.24 26.45 10.15 5.21 5.77 2010-11 21.74 4.56 27.22 10.46 5.48 5.90 2011-12 22.24 5.00 28.05 10.88 5.81 5.88
The consumption is estimated to grow at 3% for Urea and 5.6% for DAP. Between 2002-03 and 2007-08 Urea demand grew at a CAGR of 5.3% while complex fertilizer grew at 8.3%. The turnover during 2008-09 as per FAI was Rs.1,33,902 crores which works out to US $ 28.49 billion. The turnover and imports were high due to abnormal hike in raw material prices. The imports of fertilizer crude and fertilizers during 2008-09 were US $ 13.03 billion as per Government of India Statistics. Thus the domestic turnover can be estimated at USD 15.46 billion after setting off imports. During 2009-10 the provisional turnover is estimated at Rs.87000 crores i.e USD 18.51 billion. Approximately 40% will be from imported product. 3.0 Petrochemicals Production statistics as per Department of Chemicals and Petrochemicals, Ministry of Chemicals and Fertilizers is as shown in Annexure IV (see page 17). 3.1 Intermediates 3.1.1 Olefins Annexure V (see page 18) shows the Producer – Feedstock Sources for Ethylene and Propylene and the expected additions upto 2012. Ethylene capacity increased from 2690 KT in 2009 to 3697 KT by 2010. Capacity expansion of Haldia Petrochemicals Limited by 150 KT (Q1 2010) and 860 KT of Ethylene and 600 KT of Propylene additions by Indian Oil Corporation (Q2 2010) is expected. The production of Ethylene and Propylene was 2639 Tons and 1887 KT in 2008-09. Butadine capacity of 279 KT will increase by 20 KT due to debottlenecking by Haldia Petrochemicals Ltd. in 2010. chemical news july 2010 z 15
3.1.2 Fiber Intermediates Purified Terephthalic Acid (PTA) production during 2008-09 was 2154 KT. As per CPMA the production in 2009 was 2965 KT. MCC PTA India Corporation Pvt. Ltd., commissioned its second line of 800 KT in January 2010. MEG production during 2008-09 was 783 KT. IOC commissioned 325 KT MEG capacity plant at Panipat and the same is likely to begin production from April 2010 end. Large scale imports of MEG will continue to take place in foreseeable future. During 2008-09 difference between imports and exports was a net import of 490 KT resulting in an apparent demand of 1273 KT in 2008-09 for MEG. PTA/MEG demand is expected to grow by 9% in 2010 and 2011. 3.1.3 Aromatics 3.1.3.1 Benzene Benzene production during 2008-09 was 880 KTPA. There is an addition of 150 KT by IOC in Panipat in 2010. 350 KT was the net export after netting off imports for exports giving an apparent demand of 522 KT in 2008-09. Benzene demand is expected to grow at 2.6% and 2.4% in 2010 and 2011 respectively. 3.1.3.2 P-Xylene P-Xylene production during 2008-09 was 2155 KT. 256 KT was the net export after netting of imports from exports thereby giving an apparent demand of 1899 KT in 2008-09. P-Xylene demand is expected to grow at 32% in 2010 and at 3.39 in 2011 as the demand will grow for the new PTA plant of Mitsubishi. In 2010 and 2011 no new capacity is getting added except the full effect of the capacity of PX added and debottlenecking. 3.1.3.3 O-Xylene O-Xylene production during 2008-09 was 224 KT. 17 KT was the net export after netting of imports from exports thereby giving an apparent demand of 207 KT in 2008-09. No new capacity addition is expected. 3.2 Other Petrochemicals 3.2.1 Phthalic Andydride (PAN) PAN production during 2008-09 was 207 KT. 4 KT was the net export after netting of imports from exports thereby giving an apparent demand of 203 KT in 2008-09. 3.3 Polymers 3.3.1 Polyethylenes Polyethylenes production during 2008-09 was 1949 KT. 646 KT was the net import after netting of imports from exports thereby giving an apparent demand of 2595 KT in 2008-09. 16 z chemical news july 2010
In 2010 major capacity addition is by 10 CL of 350 KT of LLDPE, 300 KT of HDPE. Haldia Petrochemicals in 2010 (Q1) ncreased LLDPE capacity by 100 KT and HDPE by 20 KT. In 2011, GAIL debottlenecking of HDPE by 40 KT and LLDPE by 20 KT. 10 CL is expected to debottleneck HDPE by 65 KT and LLDPE by 15 KT. In line with capacity expansion production increase is expected. Operating rate is expected to increase to 95% by 2011. PE will grow at 10.5% and 11.0% in 2010 and 2011 respectively. 3.3.2 Polypropylenes Polypropylenes production during 2008-09 was 1949 KT. 130 KT was the net export after netting off imports from exports thereby giving an apparent demand of 1811 KT in 2008-09. PP is expected to grow at 12% and 11% in 2010 and 2011 respectively. Reliance’s 900 KT PP capacity at Jamnagar came on stream in Q4 2009. 10C’s 600 KT PP capacity is expected to come on stream by Q2 2010. 3.3.3 PVC PVC production during 2008-09 was 1051 KT. 379 KT was the net imports after netting off exports thereby giving an apparent demand of 1430 KT in 2008-09. There was a new capacity addition of 220 KT of PVC in 2009 by Chemplast. PVC imports are likely to continue in the coming years. 3.4 Synthetic detergent intermediates 3.4.1 Linear Alkyl Benzene (LAB) LAB production during 2008-09 was 434 KT. 23 KT was the net export after netting imports thereby giving an apparent demand of 411 KT in 2008-09. The LAB capacity is expected to be 5.4% and 6.1% in 2010 and 2011 respectively. 3.4.2 Ethylene Oxide (EO) EO production during 2008-09 was 117 KT. EO capacity is expected to remain unchanged till 2011. Demand growth for EO is expected to be 7% in 2010 and 2011. Some imports of EO are expected as the demand is likely to be in excess as compared to supply. 3.5 Synthetic Fibres 3.5.1 Polyester Staple Fibre (PSF) PSF production during 2008-09 was 843 KT. 120 KT was the net export after netting of imports thereby giving an apparent demand of 723 KT. Demand growth is expected to be 10% in 2010 and 2011.
ANNEXURE IV PRODUCT-WISE PRODUCTION OF MAJOR PETROCHEMICALS (Figures in 000’ MT) Products 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 “2009-10 (Apr-Dec.’09)”
A : BASIC PETROCHEMICALS 1. SYNTHETIC FIBRES ACRYLIC FIBRE 117.15 127.58 113.75 107.3 85.09 77.8 POLYESTER STAPLE FIBREFILL 38.84 39.82 47.43 47.06 44.82 51.39 NYLON FILAMENT YARN 30.96 36.77 39.56 32.43 27.81 28.25 NYLON INDUSTRIAL YARN/TYRE CORD 55.87 48.03 55.4 71.62 83.5 68.63 POLYESTER FILAMENT YARN 1003.13 970.25 1014.99 1193.63 1349.85 1261.77 POLYESTER STAPLE FIBRE 603.7 638.73 623.14 784.62 919.27 842.89 POLYPROPYLENE FILAMENT YARN 15.34 11.28 8.8 9.7 9.83 9.14 POLYPROPYLENE STAPLE FIBRE 2.77 2.97 3.11 3.55 3.5 3.44 Total 1867.75 1875.42 1906.19 2249.92 2523.68 2343.38 2. POLYMERS LOW DENSITY POLYETHYLENE 183.76 204.77 200.59 194.88 196.15 191.21 HIGH DENSITY POLYTHYLENE 958.07 1035.09 1034.75 958.39 973.61 941.59 PLYESTYRENE 274.02 275.2 310.53 284.88 274.49 239.98 POLYPROPYLENE (INC. CO-POLYMERS) 1567.22 1690.21 1540.92 2000.94 1978.23 1770.65 EXPANDABLE POLYSTYRENE 31.43 35.71 39.23 45.82 44.19 49.27 POLYVINYL CHLORIDE 878.39 884.77 953.37 926.43 997.9 1050.93 LINEAR LOW DENSITY POLYTHYLENE 606.25 649.99 688.7 771.52 837.06 816.6 Total 4499.17 4775.75 4768.05 5182.87 5303.61 5060.23 3. SYNTHETIC RUBBER STYRENE BUTADIENE RUBBER 18.88 16.06 15.45 13.12 17.4 13.5 POLYBUTADIENE RUBBER 55.75 64.14 67.34 71.69 74.4 71.98 ETHYLPROPYLENE DIMERS 5.45 3.53 4.13 3.54 0.51 0 ETHYL VINYL ACETATE 0 4.02 14.17 3 0 0 NITRILE BUTADIENE RUBBER 7.31 9.03 9.14 10.08 13.34 10.62 Total 87.39 96.78 110.23 101.43 105.56 96.09 4. SYNTHETIC DETERGENT INTERMEDIATES LINEAR ALKYL BENZENE 381.96 408.63 467.97 459.87 470.74 434.35 ETHYLENE OXIDE 71.42 79.26 87.51 96.44 114.08 117.35 Total 453.38 487.9 555.47 556.31 584.82 551.69 5. PERFORMANCE PLASTICS ABS RESIN 48.41 62.2 75.85 74.23 78.44 68.43 NYLON-6 10.36 11.71 11.75 13.41 12.98 11.37 POLYMETHYL METHACRYLATE 2.66 2.21 2.47 2.71 2.64 2.42 STYRENE ACRYLONITRILE 37.02 35.68 35.53 41.43 61.45 58.17 NYLON 6,6 0.81 1.03 1.07 1.27 1.28 0.93 Total 99.26 112.83 126.68 133.05 156.79 141.32 “Total Major Basic Petrochemicals (1 to 5)” 7006.94 7348.67 7466.67 8223.57 8674.45 8192.72 B : INTERMEDIATES FIBRE INTERMEDIATES ACRYLONITRILE 36.4 38.76 33.24 37.02 39.01 30.46 CAPROLACTUM 110.29 122.07 116.78 121 86.48 84.46 DIMETHYL TEREPHTHALATE 216.77 238.64 197.41 27.53 3.56 0 MONOETHYLENE GLYCOL 651.92 713.87 881.37 872.47 922.77 783.2 PURIFIED TEREPHTHALIC ACID 1675.72 1738.03 1734.24 2379.24 2059.18 2154.02 Total 2691.1 2851.37 2963.04 3437.26 3110.99 3052.14 OLEFINS BUTADIENE 114.13 131.4 206.94 222.66 243.96 213.72 ETHYLENE 2421.25 2644.59 2719.18 2683.37 2810.47 2638.78 PROPYLENE 1746.3 1891.9 1744.62 2089.3 2156.95 1887.46 Total 4281.67 4667.89 4670.74 4995.33 5211.38 4739.96
72.34 40.29 22.38 66.24 1008.86 728.72 6.79 2.43 1948.06 144.45 644.15 196.66 1303.06 46.49 781.58 532.56 3548.94 13.59 54.57 0 0 10.49 78.65 346.67 114.62 461.29 62.89 8.84 2 54.8 0.86 129.38 6166.32
29.67 90.4 0 550.43 2241.84 2912.34 155.24 1893.41 1388.97 3437.62
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AROMATICS BENZENE 608.28 640.09 685.82 885.52 866.95 879.67 616.31 MIXED XYLENE 55.59 63.15 55.73 57.69 73.56 77.54 40.55 ORTHO-XYLENE 206.58 145.57 242.41 431.22 268.79 224.29 271.46 TOLUENE 165.53 177.23 158.89 147.18 141.79 138.77 102.38 PARAXYLENE 1388.98 1425.28 1393.7 1925.5 2136.96 2154.86 1678.55 Total 2424.96 2451.31 2436.55 3447.11 3488.05 3475.12 2709.24 C : OTHER PETROCHEMICALS DIETHYLENE GLYCOL 45.85 48.29 58.4 60.05 68.39 58.33 51.75 DIACETONE ALCOHOL 8.67 8.74 8.94 8.96 9 7.61 6.68 ETHYLENE DICHLORIDE 265.26 253.45 263.38 220.03 262.09 276.88 331.54 BUTANOL 12.25 12.52 14.76 14.44 13.64 11.46 7 2-ETHYL HEXANOL 25.65 26.67 23.8 24.3 26.69 22.56 14.14 VINYL CHLORIDE MONOMER 302.21 292.88 307.75 279.62 288.67 303.23 501.85 EPICHLOHYDRINE 9.42 10.62 11.14 9.75 8.97 7.83 5.38 PROPYLENE OXIDE 24.88 25.17 27.19 27.94 28.29 28.63 23.74 PROPYLENE GLYCOL 13.44 14.13 15.95 16.43 16.88 16.07 13.9 POLYVINYL ACETATE RESIN 0 9.86 11.71 10.43 11.44 10.13 3.1 METHYL METHACRYLATE 4.1 4.74 4.04 4.45 4.16 3.47 3.43 ISO-BUTANOL 3.36 3.42 4.15 3.68 2.71 2.73 3.06 C4-RAFFINATE 163.58 121.02 104.57 76.12 76.69 54.66 46.81 PHTHALIC ANHYDRIDE 181.25 183.03 191.62 232.97 244.43 206.61 170.83 VINYL ACETATE MONOMER 25.74 28.68 25.56 23.6 22.95 24.32 0 Source: Annual Report 2009-10, DCPC, Govt. of India
ANNEXURE - V PETROCHEMICALS
Producer – Feedstock Sources Ethylene Capacity (KTPA) Existing Additions TOTAL 1950 - 1950
Propylene Capacity (KTPA) Existing Additions TOTAL 2800 - 2800
Additions by -
Naphtha
-
1100
1100
-
340
340
2012
Naphtha
-
860
860
-
600
600
2010
540 410
130 290
670 700
260 16
70 1240
330 956
2010 2010 / 2012
2900
2380
5280
3076
1950
5026
Company
Unit
Feedstock
RIL – Jamnagar, Hazira, Nagothane, Gandhar, Vadodara OPaL Dahej IOC Panipat
Cracker/ PRU Refinery
Naphtha / Gas (C2-C3, Propane)
Cracker Cracker/ PRU Refinery Cracker Cracker/ PRU Refinery/ FCCU Refinery
HALDIA Others – GAIL, BPCL, HMEL, MRPL TOTAL CAPACITY
Naphtha Natural Gas (C2-C3) / PRU Propylene
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3.5.2 Polyester Filament Yarn (PFY) PFY production during 2008-09 was 1261.77 KT. Net export/import of PFY was negligible during the year. The capacity addition in case of PFY is mainly due to expansion of existing players and backward integration of downstream players. Demand growth is expected to be 10% in 2010 and 2011.
Summary The size of the Petrochemicals segment is estimated at US $ 13.96 billion. Annexure VI provides details on how the estimate is arrived at. Based on the above the size of the Basic Chemicals industry can be estimated as under :
ANNEXURE VI VALUE OF PETROCHEMICALS 2008-09 Sr.No. Production Price Rs.
(KT) (Rs/Ton) Billion 1 Polymers LDPE 191.210 71700 13.710 HDPE 941.590 66400 62.522 Polystyene 239.980 70500 16.919 Polypropylene 1770.650 65000 115.092 Exp Polystyene 49.270 71560 3.526 PVC 1050.930 44900 47.187 LLDPE 816.600 70000 57.162 2 Synthetic Rubber Styrene Butadiene Rubber 13.500 50000 0.675 Polybutadiene Rubber 71.980 50000 3.599 Nitrile Butadiene Rubber 10.620 3 Performance Plastics ABS Resin 68.430 84600 5.789 Poly methyl methacrylate 2.420 149660 0.362 Nylon 6,6 0.930 - 5 Synthetic Detergent Intermediates Linear Alkyl Benzene 434.350 105850 45.976 6 Fibers Polyester Filament Yarn (PFY) 1261.770 69447 87.626 Polyester Staple Fibre (PSF)) 842.890 61628 51.946 Acrylic Fibre 77.880 113932 8.873 Nylon Filament Yarn 28.250 168572 4.762 7 PET 320.000 59466 19.029 8 Aromatics Benzene 358.000 44708 16.005 Toluene Mixed Xylene O-Xylene 17.000 50153 0.853 P-Xylene (net) 256.000 50153 12.839 9 Other Petrochemicals PAN (net) 166.610 58702 9.780 DiEhylene Glycol 58.330 38193 2.228 Oxo Alcohols 36.750 78072 2.869 Epichlorohydin 7.830 96523 0.756 Propylene Oxide 28.630 113707 3.255 Propylene Glycol 16.070 93725 1.506 Vinyl Acetate Monomer 24.320 69847 1.699 GRAND TOTAL
$ Billion 0.292 1.330 0.360 2.449 0.075 1.004 1.216 6.726 0.014 0.077 0.091 0.123 0.008 0.131 0.978 0.978 1.864 1.105 0.189 0.101 3.260 0.405 0.405 0.341 0.018 0.273 0.632 0.208 0.047 0.061 0.016 0.069 0.032 0.036 0.470 12.692 chemical news july 2010 z 19
USD Billion Inorganic Chemicals 2.44 Organic Chemicals 0.92 Fertilizer 15.46 Petrochemicals 13.96 TOTAL 32.78 4.0 Speciality Chemicals Key segments – opportunities and challenges in respect of Speciality Chemicals is shown in Annexure VII.
ANNEXURE VII: KEY SEGMENTS – OPPORTUNITIES & CHALLENGES SEGMENTS Construction Chemicals
OPPORTUNITIES z Increase in infrastructure & Construction
Paints & Coatings Chemicals
z Quality
Water Treatment Chemicals
Textile Chemicals
Personal Care Ingredients
upgrade to move closer to international standards; z Increased per capita paint consumption z Rapid industrialization leading to huge demand for effluent treatment; z Increasing awareness of recycling water; z Stricter Government regulations in industrial and institutional domains - scope for increased usage z Established manufacturing hub based on low cost manpower; z Equipments and availability of rich pool of scientists z Rising consumer awareness; z Increasing middle class disposable incomes; z Growth of local formulating & import replacement; z Huge export potential due to India’s vast experience in producing natural products
CHALLENGES z Highly Competitive; z Low value product technologies; z Limited margins; z Exports are limited and have to comply with REACH Regulations z Competition from Chinese ingredient imports; z Highly fragmented & unorganized sectors z Current lack of stricter regulations which will be implemented; z Commodity technologies highly prevalent
z High
input costs; Raw material sensitive; profit margins; z Competition from other low cost locations (Bangladesh, Vietnam etc.) z Stiff competition from Chinese ingredients; z Limited affordability for sophisticated formulations. z Low
Source: Tata Strategic Management Group, ISP Estimates
4.1 Paints Segment-wise breakup of paint industry in India is as under : MARKET SIZE (TONNES) SEGMENT 2008-09 2013-14 Decorative Paints 13,00,000 21,90,000 Industrial Coatings Auto Coatings 62,000 96,600 Other Industrial Coatings 2,78,000 4,27,800 TOTAL 16,40,000 27,15,000 The estimated market size is at US $ 2.5 billion. The industry is expected to grow at 10.6% on an overall basis. The organized sector is expected to grow at 15 – 17% per annum. Per Capita consumption in India is 1 kg compared 20 z chemical news july 2010
to 15 – 25 kg in the developed countries. With rising income levels leading to consequent growth in housing, this industry is expected to grow significantly. Similarly the growth in the auto market will also lead to growth in automotive coatings. 4.2 Dyes & Intermediates The total size of the dyestuff industry is estimated at USD 4 billion. Approximately 60% of the output of this industry is exported. There are 50 organised industries and over 900 small scale industries. India has 8.5 – 9.0% global market share. Annexure VIII gives an overview of the Indian Speciality Chemicals segment. The total size of this segment is estimated at USD 16.5 billion.
ANNEXURE VIII: Indian Specialty Market-Key Segments
Source: Tata Strategic Management Group, SRI Consulting, ISP Estimates
5.0 Knowledge Chemicals 5.1 Pharmaceutical Industry The Indian Pharmaceutical market grew at a robust 16.9% in 2009 to Rs.401 billion (USD 853) (ORG IMS MAT Dec 2009). The acute segment grew at 16.3% during the year as against 18.7% growth in the year as against 18.7% growth in the chronic segment. Of the overall market growth, existing products contributed 10.3%, new products (launched in the last 2 years) contributed 5.7%, while price changes contributed 0.9%. The Indian Pharmaceutical market is the fourth largest in volume terms and 15th largest market in value terms. It is primarily a retail based branded generic market with 80% dispensed through pharmaceutical outlets. The market is growing at 11.67% per annum to reach the size of USD 20 billion by 2015 and USD 30 billion by 2020. In the past 5 years it has grown at 13.5% and at 12.6% in the past 2 years. The industry is undergoing consolidation. With the recent acquisition of Piramal Health Care and Solvay Pharmaceuticals by Abott Laboratories, it has emerged as the leader in the Indian domestic market with a share of 6.84%. Ranbaxy entered into an alliance with one of the largest Japanese innovator Companies Daiichi Sankyo Company Ltd., to create an innovator and generic pharmaceutical power house. The combined entity now ranks among the top 20 pharmaceutical companies globally. The top 5 pharmaceutical producers as per their 12 months ended January 2009 in the Indian domestic market and their market share, is as under :
Size USD Market Growth Billion share rate %
Total Market Cipla Ranbaxy Glaxo Smith Kline Piramal Health Centre * Zydus Cadilla
6.90 0.36 0.34 0.29 0.27 0.24
100 5.30 5.00 4.30 3.90 3.60
9.90 13.40 11.50 -1.20 11.70 6.80
Source : ORG IMS - * Abbot bought stake in Solvay Pharma and Piramal Health Care and will emerge as the leader with 6.84% Market share
The exports as per the statistics of the Ministry of Commerce during 2008-09 was USD 8.8 billion. Thus the size of the industry in 2008-09 stood at US 15.8 billion. It is now estimated at USD 19 billion 5.2 Agrochemicals The size of the Indian domestic agrochemicals industry is estimated at over Rs.4000 crores or USD 1 billion. Exports are estimated at over 0.5 billion USD. The overall market size is estimated at USD 1.75 billion. Market of MNCs is over 50%. The balance is share between – (i) Basic manufacturing companies (ii) Formulators / Repacker / marketing companies Top agrochemical producers with their domestic and export turnover is as under : Sl. No. Industry Domestic Exports Total US $ million 1 United Phosphorus Ltd. 166.38 293.79 460.17 2 Bayer Crop Science 278.59 36.07 314.66 3 Rallis 131.44 61.50 192.94 4 Excel Crop Care 83.31 62.46 145.77 5 Nagarjuna Agrichem 71.73 57.07 128.80 6 Punjab Chemicals 28.90 0.00 28.90 7 TOTAL 760.35 510.89 1271.24
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5.3 Summary The size of the knowledge Chemical segment is estimated at USD 17.55 billion based on the above. 6.0 SUMMARY Based on the above analysis the size of the Indian Chemical Industry can be estimated at US USD 62.48 billion as detailed below : Sl. No
Segment USD Billion % 1 Basic Chemicals 32.78 49.05 2. Speciality Chemicals 16.50 24.69 3. Knowledge Chemicals 17.55 26.26 TOTAL 66.83 100 Methodology used 1.1 Volume data Annual report 2009-10 of Department of Chemicals and Fertilizers of Ministry of Chemicals and Fertilizers has been used for the productwise production of major chemicals. Annexure I attached gives these details for Inorganic chemicals, Organic chemicals, Pesticides and Insecticides and dyes and dyestuffs. Annexure II (Annexure III of Department’s annual report) for major petrochemicals. 1.2 Exception has been made in case of Caustic Soda industry as detailed data on production, sales tonnage and price for the year 2008-09 is available from the Notification dated 9th April, 2010 from Ministry of Finance (Department of Revenue) (Office of the Director General of Safeguards Customs and Central Excise). Liquid Chlorine volume is taken as 0.7 of Caustic Soda. Rest is used for value added products which are accounted separately. For chlorine GACL’s price from their annual report is used. 1.3 In case of Soda Ash annual reports of producers have been used to obtain the price as well as volume data. Additional data has been obtained from Tata Chemicals for domestic sales. 1.4 In case of other Inorganic Chemicals except Carbon Black, the production data of the Department of Chemicals and Petrochemicals is used. The price of Kilburn Chemicals for TiO2, DSCL for Calcium Carbide, Tanfac Industries Ltd., for Aluminium Fluoride from their respective annual reports is used. In case of Carbon Black data from annual reports of Aditya Birla Novo Ltd and Philips Carbon Black is used. In case of Potassium Chlorate and Red Phosphorus price data has been orally obtained from manufacturers. 1.5 In case of other organic chemicals the production data of Department of Chemicals and Pharmaceuticals is used. Wherever price data is available from the annual data of
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a large producer, the same has been used. In case of Nitrobenzene, Acetaldehyde and Isobutylene, the prices from manufacturers have been obtained as the same were not available from annual reports. 1.6 The data on production of the fertilizer industry has been obtained from Fertilizer Association of India. In 2008-09 the high turnover in 2008-09 was due to abnormal hike in raw material prices. Hence the estimated turnover of 2009-10 has been considered to determine the size of the industry. 1.7 In case of petrochemical industry the production data of Department of Chemicals and Petrochemicals has been used. Since the turnover in 2008-09 was high due to abnormal hike in raw material prices the current prices have been considered to determine the size of the industry. Data on Fibers had been based on 50% value addition. For chemicals 20% has been added. 1.8 In case of speciality chemicals the data on Paints has been obtained from the presentation of Mr. Ishwar Subramanian, Managing Director, Akzo Nobel and Speciality Chemicals from Mr. Philip Logan in Vision 2020 – The Third India Chemical Industry Outlook Seminar. 1.9 In case of agrochemicals the data from the presentation of Mr. Arun Dhuri of Excel Group Care in Vision 2020 - The Third India Chemical Industry Outlook Seminar has been used. The data on individual Companies has been obtained from their annual reports. 1.10 In case of pharmaceuticals the data from annual reports of Sun Pharma, Ranbaxy and Dr. Reddy’s Laboratories has been used. ORGIMS data has been extensively used by the industry. 1.11 The conversion of Rupees into USD is carried out at the exchange rate of Rs.47/USD. z Reference : 1. The Third Chemical Industry Outlook (a) Global Economy and Chemical Industry Outlook Presentation by Mr. Kamal Nanavaty, Reliance Industries Ltd. (b) Fertilizer Sector Outlook Presentation by Mr. U.S. Jha, Chairman & Managing Director – Rashtriya Chemicals and Fertilizers Limited (c) Status & Outlook of Indian Chemical Industry Inorganic and Basic Chemicals Dr. Anup Basu, Tata Chemical Limited (d) India’s Speciality Chemical and Pharma Market Dyes, Paints & Pigments Outlook S. Ishwar, Akzo Nobel (e) India’s Speciality Chemical and Pharma Markets - Presentation by Mr. Philip Logan 2. Private Communications (a) Meghani Organics (b) Tata Chemicals Limited (c) Fertilizer Association of India 3. Department of Chemical & Petrochemical, Government of Indian – Annual Report 2008 – 2009. 4. Annual Reports of various Companies.