Indian Polyolefins Markets Makarand Dixit Head-Marketing ONGC Petro additions Ltd Indian Petrochem 2014 Hotel The Lalit, Mumbai October 30-31, 2014
Agenda India A new beginning Polyolefins China & India Indian Scenario - Building Blocks Indian Polyolefins Market PE & PP Conclusions 2
Agenda India - A new beginning Polyolefins China & India Indian Scenario - Building Blocks Indian Polyolefins Market PE & PP Conclusions 3
Precursor to the new era Manufacturing (de)growth in recent times Manufacturing as drag to Indian GDP Growth Apart from corruption charges, economic drag continued 4
When Silence was no more golden 5
India saffron -ised Who thought the days of coalition was to be over? Source : Mint Research 6
Dalal street responded equally well Sensex up 24.8% in the year to date The best performing market across the globe, with the exception of Qatar, Ukraine and UAE Source : BSE 7
Some efforts lauded o o o International platforms: not only cordial relations but assertive and mutually economic beneficial A successful MARS mission. With efforts in Military modernisation, Indian defence sector considered as next sunrise industry o o o Decontrol diesel prices and put in place a new gas pricing regime More on oil and gas front Vietnam s collaboration The saga of Make in India Boost to manufacturing o The Maha-cleanliness drive Swachh Bharat Mission, Black Money -? o India finds a visionary and innovative leader!! 8
and lots more to look forward to Source : BSE, Mint Research 9
While hud-hud & nilofers can t be avoided. 10
Asia s biggest turnaround story yet to happen. Macroeconomic View (2014-15) 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% GDP Growth 5.5% Inflation (CPI Average) 8.0% Fiscal Deficit (as %ge of GDP) 4.2% CAD (As %ge of GDP) 1.5% Interest Rate (10 yrs G-sec) 8.3% India to be the Asia s biggest turnaround story says Nomura 11
The future macro-indicators are optimistic Indian growth to see definitive growth momentum A large net FDI inflow reflective of the belief in the Indian growth story Source: International Monetary Fund, Economist Intelligence Unit, December 2013 12
Megatrends to remain firm growth enablers Demographics & Per Capita Income Green Planet Infrastructure Creation Healthcare Accelerating Urbanisation Consumerism Megatrends shall remain key driver for economic growth and hence Polyolefins 13
Agenda India A new beginning Polyolefins China & India Indian Scenario - Building Blocks Indian Polyolefins Market PE & PP Conclusions 14
Demand (ktpa) Polyolefins: China = 5.5X India 40000 35000 37721 40 35 30000 25000 20000 15000 10000 5000 20365 15 3 17356 13 3 28 6 30 25 20 15 10 5 <-- Per Capita Consumption (Kgs) 0 3677 3245 6922 China India China India China India PE PP PO 0 15
AAGR (%) Indian PO growth outpaces Chinese 12 10 8 7.8 8.1 8.3 10.2 7.1 6.8 8.0 9.0 6 4 2 0 China India China India (-5) Years (+5 Years) PE PP 16
Agenda India A new beginning Polyolefins China & India Indian Scenario - Building Blocks Indian Polyolefins Market PE & PP Conclusions 17
Indian Ethylene : Demand & Supply Vol (kt) 8,500 Operating Rate 100% 7,500 95% 6,500 90% 5,500 85% 4,500 3,500 3,868 3,735 80% 75% 70% 2,500 65% 1,500 60% 500 55% -500 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Demand (6.4/12.4) Supply (6.9/12.7) Capacity (6.3/14.0) Imports (14.1/86.0) Operating rate 50% Demand led supply growth expected to be in double digits About 62% production is through heavier feed Naphtha; growing @14% Source : IHS Chemical 18
Growth Rates, 2013-18 (AAGR) Global Ethylene : Sectoral Growth Matrix 5.5 5.0 4.5 Ethylene Oxide Non-PE Usage of Ethylene PE 4.0 3.5 Alpha Olefins Vinyl Acetate EDC 3.0 Ethylbenzene 2.5 2.0 1.5 1.0 Others 0.5 0.0 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 Volumes ( 000 MT)) PE major end use segment with highest growth prospects; EO & EDC follow in non-pe end use 19
Growth Rates, 2013-18 (AAGR) 20 Indian Ethylene : Sectoral Growth Matrix 15 Ethylene Oxide PE 10 5 0 Alpha Olefins Others -5-10 -15 EDC 0 500 1,000 1,500 2,000 2,500 3,000 Volumes ( 000 MT)) India shows PE as major end use segment; EO, the only other end use, shows distinct promise 20
Indian Propylene : Demand & Supply Vol (kt) 6,000 5,000 4,000 3,000 2,000 1,000 0 3,865 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Operating Rate 100% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% Demand (14.8/5.4) Supply (14.9/5.4) Capacity (12.2/6.3) Operating rate Moderated growth in propylene capacity creation; better operating rates Source : IHS Chemical 21
Growth Rates, 2013-18 (AAGR) Global Propylene : Sectoral Growth Matrix 7.0 6.5 6.0 5.5 5.0 Acrylic Acid Propylene Oxide Non-PP Usage of Propylene PP 4.5 Butanols 4.0 Others Cumene 3.5 2-Ethylhexanol 3.0 Acrylonitrile 2.5 2.0 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 Volumes ( 000 MT)) PP major end use segment ; Acrylic Acid the fastest growing segment in non-pp alongwith PO 22
Growth Rates, 2013-18 (AAGR) Indian Propylene : Sectoral Growth Matrix 16 Propylene Oxide 12 8 4 Others Acrylonitrile Butanols PP 0 2-Ethylhexanol -4 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Volumes ( 000 MT)) India : PP the single largest use, other end uses miniscule 23
Agenda India A new beginning Polyolefins China & India Indian Scenario - Building Blocks Indian Polyolefins Market PE & PP Conclusions 24
Indian Polyolefins Demand Growth Unit : kt 12,000 10,000 8,000 6,000 4,000 2,000 0 HDPE LLDPE LDPE PP % AAGR HDPE LDPE LLDPE PP 2008-13 9.1 7.3 10.2 13.7 2013-18 7.9 7.0 11.5 10.7 25
Indian HDPE : Demand & Supply Vol (kt) 3,000 2,500 2,000 1,500 1,000 500 1,860 1,465 Operating Rate 100% 95% 90% 85% 80% 75% 70% 65% - (500) -500 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Demand (9.1/7.9) Supply (7.8/11.8) Exports (52.5/16.3) Capacity (8.2/9.9) Imports (26.2/2.8) Operating rate Increasing demand being met by spate of domestic capacity additions Better operating rates with tapering imports on cards 60% 55% 50% Source : IHS Chemical 26
Indian HDPE : Sectoral Demand Share Others 1% Film & Sheet 23% Injection Molding 14% Pipe & Extrusion 15% Others 1% Film & Sheet 22% Injection Molding 15% Pipe & Extrusion 16% Raffia 14% Fiber 4% Blow Molding 29% Raffia 13% Fiber 3% Blow Molding 30% 2013 Demand : 1,860 kt 2018 Demand : 2,179 kt Molding applications form the majority (~45%) followed by film & Sheet and Pipe & Extrusion Source : IHS Chemical 27
Indian HDPE : Sectoral Growth 16% AAGR % 08-13 14.6% 14% 12.4% 12% 10.9% 10% 8% 8.0% 8.5% 8.6% 8.6% 6% 4.4% 4% 16% 14% Raffia Pipe & Extrusion Other Film & Sheet Blow Molding Injection Molding AAGR % 13-18 Fiber Overall Demand 12% 10% 8.7% 8.9% 8.9% 8% 6% 5.7% 6.0% 6.4% 7.0% 7.9% 4% Raffia Other Fiber Film & Sheet Blow Molding Pipe & Extrusion Injection Molding Overall Demand Source : IHS Chemical Driving Segments - IM, BM, Films and Sheets & Pipe Extrusion 28
Indian LLDPE : Demand & Supply Vol (kt) 2400 1800 1200 600 0 1362 830 Operating Rate 100% 95% 90% 85% 80% 75% 70% 65% 60% -600 55% -530 50% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Demand (10.2/11.5) Supply (6.9/17.6) Capacity (9.6/18.0) Imports (29.1/-0.8) Operating rate High capacity growth follows domestic demand growth Sizeable imports to continue Source : IHS Chemical 29
Indian LLDPE : Sectoral Demand Share Injection Molding 10% Injection Molding 8% Film & Sheet 73% Extrusion Coating 5% Film & Sheet 75% Extrusion Coating 5% Wire & Cable 3% Wire & Cable 3% Rotomolding 9% Rotomolding 9% 2013 Demand : 1,362 KT 2018 Demand : 2,350 KT Films & Sheets is the major application boosted by packaging sector and continues to grow Source : IHS Chemical 30
Indian LLDPE : Sectoral Growth 14% AAGR % 08-13 12% 10% 8% 6.4% 8.1% 8.4% 10.2% 10.8% 10.2% 6% 4% 14% 12% 10% 8% Wire & Cable Rotomolding Extrusion Coating Injection Molding Film & Sheet Overall Demand AAGR % 14-18 12.2% 11.2% 11.2% 9.7% 11.5% 7.8% 6% 4% Injection Molding Extrusion Coating Wire & Cable Rotomolding Film & Sheet Overall Demand Source : IHS Chemical Driving Segments - Films and Sheets,IM,& RotoMolding 31
Indian PP : Demand & Supply Vol (kt) 6,000 5,000 4,000 3,000 2,000 1,000 0-1,000 3,314 3,680 716-350 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Operating Rate 100% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% Demand (13.7/10.5) Supply (15.4/5.3) Exports (23.1/-19.3) Capacity (15.5/3.8) Imports (34.8/23.2) Operating Rate Healthy demand growth implies better import prospects with constrained supply Source : IHS Chemical 32
Indian PP : Sectoral Demand Share Others 1% Others 1% Raffia 34% Film & Sheet 20% Raffia 35% Film & Sheet 21% Blow Molding 2% Fiber 8% Injection Molding 35% Blow Molding 1% Fiber 8% Injection Molding 34% 2013 Demand : 3,314 KT 2018 Demand : 5,457 KT IM & Raffia are the largest end use sectors supported by film & sheet Source : IHS Chemical 33
Indian PP : End Sector Growth 20% 15% 10% 5% AAGR % 08-13 5.6% 10.9% 11.8% 15.1% 18.9% 14.6% 0% -5% 20% -2.5% Other Blow Molding Injection Molding AAGR % 14-18 Film & Sheet Fiber Raffia Overall Demand 15% 10% 6.3% 7.8% 9.3% 10.9% 11.7% 11.7% 5% 7.0% 0% -5% Source : IHS Chemical Other Blow Molding Injection Molding Raffia Film & Sheet Fiber Overall Demand Driving Segments Raffia, Film & Sheet & IM 34
Agenda India A new beginning Polyolefins China & India Indian Scenario - Building Blocks Indian Polyolefins Market PE & PP Conclusions 35
Conclusions India makes a refreshed beginning with focus on exports led manufacturing, easing policy regimes and large investments slated for infrastructure, power and industries in general. Key megatrends lay firm foundation for domestic led consumption growth hovering near double digits for next 5 years. While China and India s GDP growth forecasts are similar over longer term, forecasts indicate higher multipliers of growth versus GDP for India, compared to the Far East Asian giant. Despite domestic consumption and supply growths, India is to remain net importer of Polyolefins. 36
About OPaL 37
OPaL The Anchor Tenant of Dahej PCPIR A Joint venture enterprise promoted by ONGC; co-promoted by GAIL & GSPC Incorporated in 2006 under the Companies Act, 1965 Setting up a green field mega petrochemical complex in Dahej, Gujarat, India; first PCPIR of its kind in India. Largest dual-feed cracker in India. Investing over USD $4 Bn 38
Product slate of ~2 MTPA Total Production 1900 kta HD/LLDPE 1060 kta PP 340 kta Benzene 150 kta Butadiene 115 kta CBFS 70 kta PYGas 165 kta 39
Standing Tall 40
THANK YOU Contact details: Makarand Dixit ONGC Petro additions Limited (OPaL) Omkara Complex, Sai Chowkri, Manjalpur, Vadodara, India -390 011 T: +91-265-6605, F: +91-265-6192 666, Email: makaranddixit@opalindia.in Web: www.opalindia.in 41