Petrochemicals Global Trends & Opportunities for Investment in India A N JHA, Executive Director ( Petrochemical- Project ) Date: 5 th Oct 2018
Structure of Presentation Petrochemicals Business- Environment scan Petrochemicals Global Trends Petrochemicals: Demand Supply Outlook Opportunity for Investments Conclusions 2
Petrochemical Business: Environment Scan India is one of the Fastest growing large Economy PolymerDemandisgrowingat1.5timesofGDP Lower per capita Polymer consumption base 10 kg/capita compared to global average consumption of 35 kg/capita Regional imbalance, Polymer per capita Consumption Eastern India : 3.4 Kg/Capita Northern India: 5.7 Kg/Capita Southern India: 7.6 Kg/Capita Western India : 17.0 Kg/Capita Strong Govt. support to boost economy Swachh Bharat to boost Water& sewage network, Hygiene and sanitation 100 Smart cities DigitalIndia Make in India/ Start-up India 100% FDI in food retail and many more initiatives 3
Global Trends: Refinery- Petrochemicals Integration Process Integration Innovative design considering downstream Utility Integration Heat, Hydrogen, water, power, steam Nitrogen, Air etc. Utilization of gas fuel - Utilization of Hydrogen, hydrocarbon present in gas fuel as feedstock Crude to Chemicals/ Petrochemical Refinery Refinery Refinery & Aromatics Refinery, Aromatics & Olefins Crude to Chemicals Petrochemical Intensity Index : 0% Petrochemical Intensity Index : 10% Petrochemical Intensity Index : 20% Petrochemical Intensity Index : 35-50%
Typical Global Refinery-Petrochemicals Integration model 5
Indian Polymer Growth Trend 30000 25000 20000 21230 21230 19870 28403 15000 KTA 10000 5000 0-5000 8802 8838 7171 6544 9531 5299 5979 7173 6011 1963 522 1937 986 2011 2013 2015 2017 2025 2030-1360 Production DEMAND IMPORTS Polymer demand (PE+PP) increased@ 10% CAGR during past 5 years Opportunity for Investment in Polymers 6 Source: ICIS Report, 2017
Indian Fibre Intermediates Growth Trend 16000 14000 12000 10000 10790 11705 10790 14647 KTA 8000 6000 4000 2000 3963 5856 5167 4314 1204 1542 6784 6345 7511 5154 1630 1166 915 3857 0 2011 2013 2015 2017 2025 2030 Production DEMAND IMPORTS FibreIntermediates(PTA&MEG)demandincreased@8%CAGRduringpast5years Opportunity for Investment in Fibre Source: ICIS Report, 2017 7
India Supply Demand Scenario for Top Imported Petrochemicals S. No Product Domestic Production (KTA) Demand (KTA) Imports in 2017 (KTA) Value (Rs Crore) %CAGR (2017-30)# 1 PVC 1444 3085 1658 8804 7.2% 2 PX 3160 3780 1320 6749 5.6% 3 Styrene 0 669 672 4661 4.8% 4 PP 4707 4486 504 3092 8.7% 5 HDPE 2065 2075 460 3062 9.0% 6 LLDPE 1761 2105 388 2774 9.3% 7 Methanol 220 1902 1697 2603 5.1% 8 LDPE 305 591 311 2353 5.2% 9 Metallocene LLDPE 10 Polyether Polyols 0 274 274 2348 8.9% 57 266 218 2257 6.6% *Source: Import data from the website of Department of Commerce, Ministry of Commerce & Industry # ICIS Report, 2017 8
India Supply Demand Scenario for Top Imported Petrochemicals S. No Product Domestic Production (KTA) Demand (KTA) Imports in 2017(KTA) Value (Rs. Crore) %CAGR (2017-30)# 11 Polycarbonate 0 138 142 2143 4.5% 12 MethylDiphenyl Diisocyanate (MDI) 0 146 146 1826 6.6% 13 MEG 1608 1985 434 1796 5.2% 14 VinylChloride Monomer (VCM) 15 Styrene Butadiene Rubber 995 1387 392 1771 7.8% 143 297 169 1550 8.5% 16 Toluene 905 1285 385 1521 6.6% 17 Ethyl Vinyl Acetate (EVA) 1 159 160 1475 7.4% 18 Alpha Olefins 1 99 98 1417 6.1% 19 Phenol 35 283 253 1337 5.2% 20 Butyl Rubber 0 102 102 1320 9.0% TOTAL 17,407 25,114 9,783 54,859 * Net imports of Petrochemicals has increased from Rs.10,601 Crore in 2007-08 to Rs. 54,859 Crore in 2017 *Source: Import data from the website of Department of Commerce, Ministry of Commerce & Industry # ICIS Report, 2017 9
Petrochemicals : Investment Opportunities Based on the domestic Demand-Supply Scenario and future growth rate, opportunities exists for capacity enhancement of following products: Olefins(Polyethylene + Polypropylene) Poly-Vinyl Chloride(PVC) Methanol Styrene Ethylene Glycol Elastomers(SBR, Butyl Rubber etc.) Speciality Chemicals(Polyols, Hydrocarbon Resins, MMA/PMMA etc) Polyester Yarn/Fibre -- CP and Downstream Olefins-Value added compoundings 10
Supply Demand Scenario-Major Products, KTPA S.No. Petrochemical Name Total Capacity (Installed+Under Construction) Total Demand Yr 2025 Yr 2030 Yr 2040 1 PE 7683 10,430 15,068 29,493 (HDPE+LLDPE+LDPE) 2 PP 8385 9440 13,335 22,734 3 4 5 6 7 PVC 1482 5885 7610 11,425 MEG 2400 3073 3740 5030 Acetic Acid 633 1320 1534 2022 SBR/PBR 470 803 1166 2172 Butyl Acylate 340 254 325 529 11
Requirement of C2 and C3 Monomers C2 Year 2017 2025 Monomer Requirement 6305 14520 Existing/ProjectedProduction 4836 7304 C2 from Incremental Refining Capacity - 170 Net Capacity Required - 7046 C3 Year 2017 2025 Monomer Requirement 4486 9440 Existing/ProjectedProduction 4707 7695 C3 from Incremental Refining Capacity - 440 Net Capacity Required - 1305 The monomer requirement is based on demand of bulk polymers namely PVC, PE & MEG as per Petrochemical Perspective Plan-2040. 12
Cracker Capacity and Estimated Investment Parameter Yr 2025 Balance C2 required from Crackers 7046 Balance C3 required from Crackers 1305 Total Number of Crackers required (@1500 KTPA C2 Capacity) Approximate Investment (Rs Cr) 5 1,75,000-2,00,000 (100% Gas feed) 2,00,000-2,25,000 (Dual feed) The Crackers may be Gas based or Dual feed based. The choice of feedstock will depend on prevailing economics, feedstock availability, relative prices of feedstocks etc. The feedstock availability from Refineries shall depend on capacity expansion projects implemented in future. BeyondYr2025,InordertomeetprojectedpetrochemicaldemandofYr2040, onan average one Cracker of 1.5 MMTPA capacity is required every year. 13
Capital Investment Estimations of Olefin Production Source ICIS 14
Strategy for Investment in Petrochemicals Long Term (Immense cost) Steam Crackers Poly Olefins (PE & PP) Ethylene Glycols Short Term (Base cost) Value added Poly Olefins (Compounding & Others) Mid Term (Standard cost) Poly Vinyl Chloride (PVC) Styrene Phenol Elastomers Polyesters
Conclusions: Deficit in Indian Petrochemical Markets & sustained Growth Investment opportunity in olefins and speciality petrochemicals & chemicals- High Value- Mid term/ Long Term Investment opportunity in Deep downstream in Yarn/ Fibres andvalueaddedpolymers. Lowcost -shortterm 16
17
Petrochemicals : Japanese Investment in Neemrana, Gurgaon (India) & Others Company T S Tech Company Limited Roki Minda Company Pvt. Limited Mitsui Prime advanced Composites India Private Limited Mytex Polymers (Subsidiary of Mitsubishi chemical corporation, Japan) Sekisui DLJM Molding Pvt. Limited Kingfa, Basell(Zylog), APPL, Hyundai, Machino Polymer etc Products Resin based AutomotiveProducts for Motorcycle, seats and other parts Automotive air intake system, carbon canister, Power steering fluids, filters Automotive interior and exterior components High performance engineered Polyolefin Automotive Interior components. AutomotiveCompounders with Homo/RCP/ICP Polymers (35-100 MFI) 18