Apic2017 India Report

Indian Petrochemical Industry
Review of 2016-17 & Outlook for 2017-18
APIC 2017
Country Paper from India
Prepared by
Chemicals & Petrochemicals Manufacturers’ Association
708, 7th Floor, Kailash Building,
26, Kasturba Gandhi Marg,
New Delhi – 110001, INDIA
Phone: 91-11-43598337, Fax: 91-11-43598337
Email: cpmai@airtelmail.in
Website: www.cpmaindia.com
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2017 Asia Petrochemical Industry Conference
May 18th – 19th 2017, Japan
Content
SECTION 1 ........................................................................................................ 5
THE INDIAN ECONOMY: REVIEW OF 2016-17 & OUTLOOK FOR 2017-18 ........................... 6
THE INDIAN ECONOMY REVIEW OF 2016-17 ........................................................... 6
SNAPSHOT OF KEY INDICATORS ......................................................................... 9
I. IIP – INDEX OF INDUSTRIAL PRODUCTION ..................................................... 12
II. CORE INDUSTRIES PERFORMANCE ............................................................. 14
III. BALANCE OF PAYMENTS ........................................................................... 15
IV. FDI ......................................................................................................... 16
V. FOREX RESERVES .................................................................................... 17
VI. FII FLOW AND STOCK MARKET ................................................................... 18
VII. CURRENT ACCOUNT DEFICIT ...................................................................... 20
VIII. INFLATION ............................................................................................... 23
IX. RUPEE (₹) ................................................................................................ 24
OUTLOOK FOR 2017-18: INDIA ............................................................................ 26
SECTION 2 ...................................................................................................... 29
PETROCHEMICAL INDUSTRY IN INDIA ..................................................................... 30
PETROCHEMICAL INDUSTRY REVIEW OF 2016 & OUTLOOK FOR 2017 ............................ 30
MONOMERS ................................................................................................... 35
A. ETHYLENE & PROPYLENE .......................................................................... 35
B. BUTADIENE ............................................................................................. 36
C. STYRENE ................................................................................................ 37
POLYMERS .................................................................................................... 38
INTERMEDIATES ............................................................................................. 38
A. EDC AND VCM .......................................................................................... 38
POLYOLEFINS ................................................................................................ 39
VINYL’S: PVC ................................................................................................. 41
STYRENICS.................................................................................................... 42
A. POLYSTYRENE ......................................................................................... 42
B. ACRYLONITRILE-BUTADIENE-STYRENE (ABS) ............................................... 42
C. STYRENE-ACRYLONITRILE (SAN) ................................................................ 43
PET (POLYETHYLENE TEREPHTHALATE) ............................................................ 43
AROMATICS – PARAXYLENE............................................................................. 45
FIBRE INTERMEDIATES .................................................................................... 46
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SYNTHETIC FIBRES ......................................................................................... 48

SURFACTANTS ............................................................................................... 49
SYNTHETIC RUBBER ....................................................................................... 50
CARBON BLACK FEEDSTOCK & CARBON BLACK ................................................. 52
OTHER KEY PETROCHEMICALS ........................................................................ 54
OUTLOOK FOR THE OVERALL INDIAN PETROCHEMICAL INDUSTRY ................................ 55
SECTION 3 STATISTICAL APPENDIX – DEMAND SUPPLY BALANCE................................... 57
MONOMERS (KT)............................................................................................... 58
POLYMERS (KT) ................................................................................................ 58
INTERMEDIATES (KT) ......................................................................................... 60
POLYOLEFINS (KT) ............................................................................................ 61
VINYLS (KT) .................................................................................................... 61
STYRENICS (KT) ............................................................................................... 61
PET (KT) ........................................................................................................ 62
AROMATICS - PX (KT) ........................................................................................ 62
SURFACTANTS (KT) ........................................................................................... 63
FIBRE INTERMEDIATES (KT) ................................................................................. 63
SYNTHETIC FIBRES (KT) ..................................................................................... 64
ELASTOMERS (KT) ............................................................................................ 66
CARBON BLACK & CBFS (KT) ............................................................................... 67
OTHER KEY PETROCHEMICALS (KT) ....................................................................... 68
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TABLE
TABLE 1: USE BASED CLASSIFICATION OF (IIP) .................................................................... 13
TABLE 2: CORE INDUSTRIES GROWTH RATE (IN PERCENT) ...................................................... 15
TABLE 3: INDIA’S GDP GROWTH PROJECTION – 2017 - 18 ...................................................... 27
TABLE 4: ETHYLENE & PROPYLENE NET AVAILABILITY .......................................................... 35
TABLE 5: BUTADIENE DEMAND SUPPLY ............................................................................. 37
TABLE 6: STYRENE DEMAND SUPPLY ................................................................................ 37
TABLE 7: EDC & VCM IMPORT INTO INDIA .......................................................................... 39
TABLE 8: POLYOLEFIN DEMAND IN INDIA ACTUAL & PROJECTED .............................................. 39
TABLE 9: PVC DEMAND SUPPLY ...................................................................................... 41
TABLE 10: POLYSTYRENE DEMAND SUPPLY ........................................................................ 42
TABLE 11: ABS DEMAND SUPPLY ..................................................................................... 43
TABLE 12: SAN DEMAND SUPPLY ..................................................................................... 43
TABLE 13: POLYMER DEMAND SUPPLY .............................................................................. 38
TABLE 14: PET DEMAND SUPPLY ..................................................................................... 45
TABLE 15: PARAXYLENE DEMAND SUPPLY ......................................................................... 46
TABLE 16 : FIBRE INTERMEDIATE DEMAND SUPPLY ............................................................... 46
TABLE 17: DEMAND SUPPLY BALANCE OF SYNTHETIC FIBRE ................................................... 48
TABLE 18: DEMAND & SUPPLY OF LAB & EO ....................................................................... 50
TABLE 19: DEMAND SUPPLY BALANCE OF PBR, SBR, NBR & EPDM ............................................. 51
TABLE 20: DEMAND SUPPLY BALANCE OF CBFS & CARBON BLACK ............................................ 54
TABLE 21: DEMAND SUPPLY BALANCE OF BENZENE, TOLUENE, MXS & OX................................... 54
Figure
FIGURE 1: INDIA’S GDP GROWTH (YEAR-ON-YEAR IN PER CENT) ................................................ 9
FIGURE 2: QUARTERLY ESTIMATE OF GDP GROWTH (IN PER CENT) ........................................... 10
FIGURE 3 : QUARTERLY GROWTH IN SECTORS TILL Q3 FY17 ................................................... 11
FIGURE 4: INDEX OF INDUSTRIAL PRODUCTION (IIP) ............................................................. 13
FIGURE 5: FDI INFLOWS ............................................................................................... 16
FIGURE 6: FOREX RESERVES JUMPED $1.2 BILLION .............................................................. 17
FIGURE 7: FOREIGN INSTITUTIONAL INVESTORS .................................................................. 18
FIGURE 8: STOCK MARKET PERFORMANCE ......................................................................... 20
FIGURE 9: Q2 CAD AT 0.6% OF GDP ................................................................................. 21
FIGURE 10: TRADE DEFICIT AT $8.89 BILLION .................................................................... 22
FIGURE 11: RATE OF INFLATION (IN PERCENT).................................................................... 23
FIGURE 12 : RUPEE MOVEMENT IN LAST ONE YEAR .............................................................. 25
FIGURE 13: PER CAPITA POLYMER CONSUMPTION VS PER CAPITA GDP ~ 2016 ............................. 30
FIGURE 14: AGGREGATE PETROCHEMICAL DEMAND (ALL KEY SEGMENTS – MMT) ........................... 56
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Section 1
The Indian Economy
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The Indian Economy: Review of 2016-17 & Outlook for 2017-18
The Indian Economy Review of 2016-17
India has become the sixth largest manufacturing country in the world, rising up
from the previous ninth position, and thus retaining its bright spot in the world
economic landscape. In the last few months, two far reaching changes happened
in the Indian economy – demonetisation and passing of the GST Bill.
In order to weed out unaccounted money from the system, the Government
demonetized high value currency notes in November 2016. As a result, there was
a temporary shortage of cash, which also provided a major boost to digital
transactions. However, after the initial period of hardship, things have rapidly
normalized.
The other major economic event which happened in the Indian economy in the last
few months was the passing of the GST Bill. The GST Bill paves the way for roll
out of the GST regime in India which will transform India to a unified market with a
single tax structure.
Post the demonetization announcement, the pace of remonetisation has picked

up, and it is expected that the effects of demonetisation will not spill over into the
next financial year.
India seems to have braved the effects of demonetisation with the economy
growing at an unexpectedly robust 7% in what was deemed to be the worst hit
October-December quarter. It's now forecast to achieve 7.1% growth in the year
to March. Going by these projections, India will retain its tag of being the fastest-
growing major global economy.
The IMF expects the Indian economy to grow by 6.6% in 2016–17, which is not
only a significant one percentage point lower than the previous estimate, but also
brings India back to the status of the second-fastest growing economy, especially
as China is expected to outgrow by 6.7%.
Recognizing the strength of Indian economic fundamentals, the IMF expects the
impact of demonetization to fade away gradually, as it pegs the 2017–18 growth
at 7.2%, overtaking China again by a good 0.7 percentage points. The World Bank,
however, is more optimistic and has projected a GDP growth of 7% in 2016–17,
7.6% in 2017–18 and 7.8% in 2018–19. Clearly, what makes India resilient to
global flurries, to a great extent, is its rock-solid domestic demand, accounting for
about 60% of the GDP. This figure is 37% for China, and this has led the Chinese
economy’s restructuring and rebalancing to rely less on exports and investment
and more on consumption demand.
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The broad macroeconomic indicators, based on latest data, are as follows:
Firmer food and fuel prices drove India’s overall inflation higher in February, further
dimming any possibility of a cut in interest rate by the Reserve Bank of India amid
worries of hardening global commodity prices and expectation of vegetables
turning dearer as summer approaches.
India’s headline inflation rate based on the Consumer Price Index (combined) went
up to was 3.65% in February compared with 3.17% in January and 5.26% a year
ago. Wholesale inflation firmed up to a 39-month high of 6.55% in February from
5.25% in January. With likely GST rollout in July, analyst suggest, this could add
to inflationary pressure. The fiscal deficit as a percentage of GDP was budgeted
at 3.5% for 2016–17 in the previous year’s budget. This stands revised to 3.2% for
2017–18.
FDI in India grew 18% during 2016 to touch $46 billion. The country attracted FDI
of $39.32 billion in 2015. India’s forex reserves increased by $1.2 billion to $364.01
billion for the week ended March 10th 2017 due to surge in currency assets to touch
a high new. FIIs invested about $1.5 billion (Rs 9,902 crore) in equities during
February 2017, the highest in the last five months.
India’s trade deficit narrowed by 25% in the cumulative period of April to December
2016 when it stood at $76.5 billion, as against $100.1 billion in the corresponding
period of the previous year. This is on the back of a 7.4% decline in imports coupled
with a meagre growth of 0.75% in exports during said period. Imports of both oil
and non-oil products dropped during this period by 10.76% and 6.42%,
respectively, reflecting the subdued gross capital formation.
The rupee on 14th March 2017 surged to touch 17 month high against the US dollar
at 65.39 ahead of the key events in domestic as well as international markets. At
the current level rupee is the third best performing Asian currency after South
Korean Won and Taiwanese dollar since the start of the calendar year.
In March last year, former RBI governor Raghuram Rajan had said that market
forces bring the exchange rate to its Goldilocks level and the regulator only
intervenes to smoothen the journey. Going by his words, the rupee seems to have
found its Goldilocks level.
India posted a current account deficit (CAD) of $3.4 billion, or 0.6% of gross
domestic product (GDP), in the July-September quarter. The value of Indian
equities has climbed to $1.82 trillion, a nine-year high, after the Nifty gauge
rebounded from a low in December as data showed Asia’s third-largest economy
is recovering from Modi’s decision late last year to junk high-value currency notes.
That is about 87% of the nation’s GDP.
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As a result of very good rainfall during monsoon 2016 and various policy initiatives
taken by the Government, the country has witnessed record foodgrain production
in the current year. As per second advance estimates for 2016-17, total foodgrain
production in the country is estimated at 271.98 million tonnes which is higher by
6.94 million tonnes than the previous record production of Foodgrain of 265.04
million tonnes.
Proactive policy reforms along with several campaigns and initiatives, such as
Make in India, Digital India, Skill India, Start-up India and Swachh Bharat Abhiyan
(Clean India Mission), are likely to transform the extent and the quality of rural and
urban infrastructure. These steps are expected to bring forth a number of
investment opportunities.
Prime Minister Modi's 'Make in India' initiatives and push towards manufacturing
remains in place, where by road building targets of 40 km per day and attracting
foreign companies to establish factories, India will continue to boost oil demand.
The government has set a target of constructing 15,000 km of highways in the next
financial year, 50% more than that in the current fiscal. The government has
approved an over Rs 110 billion project to construct all-weather roads and improve
connectivity for security reasons.
The projects identified under Sagarmala Programme are expected to mobilize

more than Rs. 7 trillion of infrastructure investment, double the share of domestic
waterways (inland& coastal) in the modal mix, generate logistic cost savings of Rs.
350-400 billion per annum, boost merchandize exports by USD 110 Billion and
enable creation of 10 million new jobs, including 4 million direct jobs, in the next
10 years.
Indian Railways has set a daily target of laying 9.5 km of tracks to complete its
ambitious line doubling and capacity expansion projects earmarked for the next
financial year. The railway ministry plans to spend Rs 1.31 trillion — the highest-
ever for capacity expansion — in the next financial year. It has received Rs 550
billion from the finance ministry as gross budgetary support.
In FY17, government utilized the additional revenues from tax revenues to boost
rural spending. Total spending in rural areas has exceeded the budget estimate by
12% to register a robust 27% growth. And now that India’s GDP growth forecast
for 2016 is slated to be 7.1%, India is firmly on its way to catapult into a global
growth engine. This growth rate also makes India one of the fastest growing large
economy in the world, overtaking a slowing China, on the back of an improvement
in the manufacturing and farm sectors.
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With the government ready to run the extra mile on key reforms including land
acquisition and infrastructure, the economy is poised for growth in the coming
months.
Snapshot of Key Indicators
The last year saw India enter a sweet spot as growth rebounded, inflation declined
and the external accounts came under control. From then on there has been a lot
of positivity built around the India growth story and India seems to be poised to
enjoy another spurt in growth.
There is a real sense that a new set of reforms and the enthusiasm in the markets
can lead India towards another prosperous era of high growth. India’s economy
grew faster in 2015-16 than earlier estimated, which could result in slower growth
in the current fiscal because of a higher base.
Figure 1: India’s GDP Growth (year-on-year in per cent)
The upward revision of the 2015-16 data was mostly due to a significant increase
in growth estimates for the industrial and services sectors. While the industrial
sector is now estimated to have grown at 8.2% against the earlier estimation of
7.4%, the services sector is estimated to have grown at 9.9% against 8.9% earlier.
The farm sector growth rate was, however, cut to 0.76% from 1.2% estimated
earlier.
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Gross fixed capital formation, the proxy for investment demand in the economy,
was also underestimated earlier. It is now revised to 6.1% from the earlier estimate
of 3.9% for 2015-16. Private consumption demand, however, has been marginally
revised downward, from 7.4% to 7.3% for 2015-16.
As a start, growth rebounded in the crucial industrial sector as all the three major
components namely the mining, manufacturing and electricity picked up pace from
last year.
Figure 2: Quarterly Estimate of GDP Growth (in per cent)
Gross domestic product (GDP) for the third quarter (Q3) of financial year 2016-17
(FY17) grew at 7%, allaying fears of any major effect of demonetisation though it
was the lowest expansion in four quarters.
Private final consumption expenditure, denoting demand, rose at double the rate
(10%) in Q3, against five per cent in Q2. Government consumption continued to
be the greatest support for the economy in the current year. In the third quarter,
government consumption grew 19.6%
Gross fixed capital formation, an indicator of private investment, also rose after a
three quarter decline.
The Q3 numbers not only made India the fastest-growing large economy in the
world but also helped the Central Statistics Office (CSO) retain its earlier projection
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(in first advance estimates) for full-year GDP growth at 7.1% in the second
advance estimates.
CSO stuck to its projection despite the fact that GDP growth for 2015-16 was
revised to 7.9% from earlier 7.6% after release of the first advance data.
Investment continued to show weakness for the entire financial year even though
it was shown to rise against contraction in earlier data. First advance estimates did
not take into account the impact of demonetisation, while the second one factored
it in terms of latest available data.
The higher-than-expected growth in the third quarter was driven primarily by

manufacturing, agriculture and government-boosted expenditure. According to
data released by CSO, Q3FY17 GDP growth was only slightly less than 7.4 per
cent in the July-September period despite demonetisation. The growth of Q2 was
revised upwards by 0.1% point.
Figure 3 : Quarterly Growth in Sectors till Q3 FY17
For the third quarter of fiscal year: The manufacturing sector grew at 8.3%
compared to 7.1% in the previous quarter. The construction sector saw growth slip
to 2.7% compared to 3.5% in the previous quarter. The trade, hotel, transport
segment reported growth of 7.2% compared to 7.1% in the previous quarter.
Growth in the financial services segment was at 3.1% compared to 8.2% in the
previous quarter. The agriculture sector grew at 6% compared to 3.3% last quarter.
The mining sector also rebounded, showing growth of 7.5% in the third quarter
compared to -1.5% in the previous quarter
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Overall, while the services segment saw growth slow to 6.8% in the third quarter
compared to 8.2% in the second quarter, the industrial and agricultural segment
surprised positively. Industry grew at 6.6% in the third quarter compared to 4.2%
in the second quarter. This is contrary to other indicators such as the
manufacturing purchasing managers’ index (PMI) which fell sharply in November
and December but showed a rebound in January.
Private final consumption expenditure rose 10% compared to a year ago.

Government consumption continued to be the greatest support for the economy in
the current year. In the third quarter, government consumption grew 19.6%. Gross
fixed capital formation, an indicator of private investment, also rose after a three
quarter decline.
Analysts polled by Reuters expected Q3 GDP growth to be 6.4%; those polled by

Bloomberg expected it to be 6.1%. Contrary to expectations, gross value added
(GVA) grew at 6.6% for the quarter; it is expected to grow at 6.7% for the full year.
It appears like the negative impact of demonetisation was over-estimated. India

still maintains a 7% growth rate and remains one of the brightest spots in the global
economy. However, there was some impact of demonetisation. For instance, in
the first advance estimates GVA was projected to be 7% for 2016-17. Due to higher
indirect taxes, net of subsidies, GDP growth came at 7.1% in the second advance
estimate as well.
The boost came from agriculture, which is forecast to grow 6% in the third quarter
on the back of a good monsoon. The financial sector has taken a hit from the
currency swap and is forecast to grow only 3.1% in GVA.
Manufacturing grew 8.8% when the expectation was that demand compression will
hit factory output. Construction reported only 2.7% growth in line with the anecdotal
evidence of a slump because of lack of cash.
i. IIP – Index of Industrial Production

Industrial production bounced back into expansion in January, kicking off the
financial year’s last quarter on a positive note albeit amid expectations that it will
bear the brunt of demonetisation.
IIP rose 2.7% in January from a year ago, the second fastest monthly growth this
financial year behind 5.7% recorded in November. Industrial production had
contracted 0.1% in December, the first full month after demonetisation, which was
announced on November 8.
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Figure 4: Index of Industrial Production (IIP)
On cumulative basis, IIP during April-January 2016-17 showed an expansion of

0.6%, which was lower than 2.7% reported in the year-ago period. The indices of
industrial production for mining, manufacturing and electricity sectors posted
growth rates of 5.3%, 2.3% and 3.9% respectively in January 2017.
The cumulative growth in these three sectors during April-January 2016-17 was
1.4%, (-) 0.2% and 5.0%, respectively. The resumption of growth in consumer
durables output signals some normalization of production schedules, with the
inventories that built up after the note ban likely to have moderated, as well as
some improvement in consumer sentiment.
Table 1: Use based Classification of (IIP)
Trend in IIP Growth
Sectoral Use-Based Claasification
IIP Mining Manufacturing Electricity Basic Capital Intermediate Durables Non-Durables
Weight 100% 14.2% 75.5% 10.3% 45.7% 8.8% 15.7% 8.5% 21.4%
Month
Dec-15 -0.9% 2.8% -1.9% 3.2% 0.7% -18.6% 1.5% 16.6% -2.7%
Jan-16 -1.6% 1.5% -2.9% 6.6% 1.9% -21.6% 2.8% 5.6% -3.2%
Dec-16 -0.1% 5.5% -1.7% 6.3% 5.3% -3.9% -1.3% -8.9% -4.4%
Jan-17 2.7% 5.3% 2.3% 3.9% 5.3% 10.7% -2.3% 2.9% -3.2%
Apr-Jan 2016 2.7% 2.1% 2.5% 4.7% 3.3% -0.6% 2.1% 11.6% -1.2%
Apr-Jan 2017 0.6% 1.4% -0.2% 5.0% 4.4% -15.0% 2.2% 4.9% -2.3%
Source: Central Statistics Office (CSO)
Data released last month by the statistics office showed the economy is likely to
expand 7.1% in FY17, confounding independent experts who had mostly penciled
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in 6.5-7% growth because of demonetisation. The consensus view is that the worst
of the demonetisation effect may manifest itself in the March quarter. The typically
volatile rubber insulated cables pulled up the capital goods and overall growth
substantially. The segment reported a 283% rise in output in January. Excluding
capital goods, growth in January would be lower at 1.9%. Except for the consumer
nondurables sector, all other subsectors of the index of industrial production
reported growth, capital goods leading with a 10.7% rise in January.
Mining was up 5.3%, manufacturing 2.3% and electricity generation 3.9%, all
contributing to the IIP surge. Production of consumer goods was down 1% in
January from a year ago because of a 3.2% fall in the output of consumer non-
durables. Consumer durables rose 2.9% in January.
In terms of industries, nine of the 22 groups registered growth, led by electrical

machinery and apparatus followed by radio, TV and communication equipment
and basic metals.
ii. Core Industries Performance
The output of India's eight infrastructure industries last month increased by 3.4%
from a growth of 5.6% reported in December 2016. The Eight Core Industries (ECI)
index had reported a rise of 5.7% in January 2016. The cumulative growth during
April to January stood by 4.8%.
The data which represents the output of major industrial sectors was released by
the Ministry of Commerce and Industry. The ECI index comprises of nearly 38%
weightage of the items included in the Index of Industrial Production (IIP). The
index includes sectors like coal, crude oil, natural gas, refinery products, fertilizers,
steel (alloy and non-alloy), cement and electricity. Electricity generation, which has
the highest weightage of 10.32% in the IIP, edged up by 4.8% in January, as
compared with the corresponding month of 2016.
Steel production, the second most important component with weightage of 6.68%,
increased by 11.4% in the month under review. However, distilling of refinery
products, the third most important component as per weightage, inched down by
1.5% in January, as compared with the corresponding month of last year.
Conversely, extraction of crude oil, which has a 5.22% weightage in IIP, was
slightly higher by 1.3% during the month in consideration. Coal mining, with a
4.38% weightage, increased by 4.8% in January. In contrast, cement production,
which has the weightage of 2.41%, decreased by 13.3% in January 2017 over the
same month of 2016.
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On the other hand, the sub-index for natural gas output, with a weightage of 1.71%
edged higher by 11.9% during the month under consideration. Fertilizer
manufacturing, which the least weightage of only 1.25% has declined by 1.6% in
January.
Table 2: Core Industries Growth Rate (in percent)
Growth in Index of Index of Core Natural Refinery
Core Industries Industries Coal Crude Oil Gas Products Fertilizers Steel Cement Electricity
Weight 37.9% 4.4% 5.2% 1.7% 5.9% 1.2% 6.7% 2.4% 10.3%
Month
Nov-15 0.6% 3.8% -3.3% -3.9% 1.7% 13.9% -6.8% -1.7% 5.6%
Dec-15 2.9% 5.3% -4.1% -6.1% 2.1% 13.5% -3.1% 4.1% 8.8%
Jan-16 5.7% 7.9% -4.7% -15.2% 8.9% 8.2% 0.0% 9.2% 11.6%
Nov-16 4.9% 6.4% -5.4% -1.7% 2.0% 2.5% 5.6% 0.5% 10.2%
Dec-16 5.6% 4.5% -0.8% 0.0% 6.4% -4.8% 14.9% -8.7% 6.0%
Jan-17 3.4% 4.8% 1.3% 11.9% -1.5% -1.6% 11.4% -13.3% 4.8%
Apr-Jan 2016 2.9% 4.9% -1.2% -4.0% 3.0% 11.0% -1.5% 3.3% 6.7%
Apr-Jan 2017 4.8% 2.3% -2.8% -1.9% 6.8% 2.9% 9.2% 1.0% 5.4%
Source: Index of Eight Core Industries, Central Statistics Office (CSO)
iii. Balance of Payments
The balance of payments was at a surplus of $8.5 billion compared with a deficit
of $900 million a year ago.
Portfolio investment recorded a net inflow of $8.2 billion during the first half (April-
September) as against a net outflow of $3.5 billion a year ago.
Net services receipts moderated on y-o-y basis, primarily owing to the fall in
earnings from software, financial services and charges for intellectual property
rights.
Private transfer receipts, mainly representing remittances by Indians employed

overseas, amounted to US$ 15.2 billion, having declined by 10.7% from their level
a year ago. In the financial account, net inflows of both foreign direct investment
and portfolio investment were significantly higher in Q2 on a y-o-y basis.
Non-resident Indian (NRI) deposits declined to US$ 2.1 billion in Q2 of 2016-17

from US$ 4.2 billion in Q2 of 2015-16. Net loans availed by banks witnessed a net
repayment of US$ 9.0 billion in Q2 of 2016-17 as against net borrowing of US$ 3.1
billion in Q2 of 2015-16.
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Analysts expect the balance of payments to be in surplus in 2017/18 but with

downside risks.
iv. FDI
Overseas investment in India is likely to surge to a record in the year ending March
despite temporary growth hiccups ascribed to the currency swap programme.
This underscores India’s status as an island of economic stability, especially as

foreign direct investment (FDI) flows worldwide slumped 13% last year amid
uncertainty thanks in part to a backlash against globalization. India’s FDI in the
April-December period rose 22% to $35.8 billion from the year earlier. With three
months to go for the fiscal year end, the government expects fresh inflows into
equity to top the $40 billion India got in FY16.
Invest India, the government’s official investment promotion and facilitation

agency, is shepherding proposals worth $62 billion spanning 295 deals, of which
$3 billion has already come in.
Services sector continued to attract highest investment of $7.5 billion followed by

telecommunications sector which attracted $5.5 billion inflows during the first nine
months of the financial year 2016-17.
Figure 5: FDI Inflows
Over 90% of FDI is coming in through the automatic route, which has expanded in
its scope over the last two years. The surge comes even as the government
expects growth to slip to 6.5-6.75% in the current fiscal year from 7.9% in FY16
due to global factors and demonetization. In the February 1 Budget, the Centre
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announced its decision to abolish Foreign Investment Promotion Board (FIPB) and
promised more reforms to make things easier for overseas investors.
FDI in India grew 18% during 2016 to touch $46 billion. The country attracted FDI
of $39.32 billion in 2015. The main sectors which attracted the highest foreign
inflows include services, telecom, trading, computer hardware and software and
automobile.
Bulk of the FDI came in from Singapore, Mauritius, the Netherlands and Japan.
The government has announced several steps to attract foreign inflows. The
measures includes liberalization of FDI policy and improvement in business
climate. The government is also considering a proposal to increase FDI limit in
print media to 49% from 26%. Besides, a proposal to allow 100% FDI through the
automatic route in single brand retail is also under consideration with a view to
attracting more global players in the sector. FDI inflows into India firmed up by 22%
to $35.85 billion during April-December 2016.
v. Forex reserves
India’s forex reserves increased by $1.2 billion to $364.01 billion for the week
ended March 10 due to surge in currency assets. Total reserves had declined by
$56.8 million to $362.73 billion in the previous reporting week. Foreign currency
assets (FCAs), a major component of the overall reserves, increased by $63.4
million to $339.783 billion in the previous week, as per RBI.
Figure 6: Forex Reserves jumped $1.2 billion
17
India has also been receiving a strong intake of investments from foreign investors
throughout the New Year. According to data from NSDL, Rs 22654 crore has been
pumped into the Indian markets by foreign investors.
Expressed in US dollar terms, they include the effects of appreciation/depreciation

of non-US currencies, such as the euro, pound and the yen held in the reserves.
Gold reserves remained unchanged during the week at $19.248 billion. The special
drawing rights with the International Monetary Fund rose by a marginal $100,000
to $1.444 billion; while India’s reserve position with the Fund, too, increased by
$0.2 million to $2.318 billion, as per RBI.
vi. FII Flow and Stock Market
After pulling out massively from the Indian stock markets during the last quarter
(October-December) of 2016, foreign institutional investors (FIIs) have turned
active buyers again on the bourses. FIIs have invested about $1.5 billion in equities
during February, the highest in the last five months. With growth outlook turning
uncertain following the demonetisation exercise, FIIs exited Indian markets in a big
way in late 2016.
Figure 7: Foreign Institutional Investors
They net sold stocks to the tune of about $4.7 billion between October and
December. They offloaded shares to the tune of a whopping $2.76 billion in
November alone when demonetisation brought earnings of corporates under a
cloud. Due to the heavy pull-out, FIIs, who own about 25% on an average in BSE-
18
200 companies, made net investments of just $3.1 billion in the stock markets in
2016.
The trend continued in January with overseas investors remaining sellers on a net
basis during the month. But February has brought good tidings with a host of
factors including better than expected earnings and ample global liquidity bringing
FIIs back in the market.
There were no negative announcements in the union budget for the markets and
overseas investors. This also helped. The weakness in the US dollar amid positive
flows into emerging markets (EMs) led to a revival in interest in Indian markets,
say experts.
The sharp increase in metals and commodities prices in the last few months has
resulted in greater inflows into markets such as Russia. The 12-month forward PE
(price-earnings) of the Sensex is at around 17 times, which shows that it is not
really cheap. The benchmark Sensex and broader Nifty have gained 3.9% and
3.7% respectively in February. Both indices are trading very close to their all-time
high hit during March 2015.
The heavy selling in November and December last year resulted in FIIs turning
sellers on an aggregate basis (debt and equities) for the first time since 2008 when
the stock markets crashed following the global financial crisis. Their net sales in
India stood at Rs. 18739 crore or $3.5 billion on an aggregate basis in 2016 -NSDL
data.
Nifty closed at all-time high of 9,160 on 17th March 2016 and Sensex reclaimed
29000-mark after September 2016 on sustained buying by domestic institutions
amid robust foreign fund inflows and expiry of derivative contracts and closed at a
high of 29,648-mark.
Secondly, there has been a growing optimism over corporate tax cuts and other
policy proposals reiterated by US President Donald Trump during his speech
before the Congress. Markets in last few months have remained steady despite
FPI selling, showing the increasing importance of the Domestic investors.
Going ahead, analysts believe that India will continue to attract FII flows over the
long term, as economic fundamentals remain stronger than other emerging market
economies. That apart, clarity on the path that the US Fed is likely to follow should
keep the current momentum in the equity markets strong, they say.
19
Figure 8: Stock Market Performance
Historically, Indian market used to follow the Foreign Portfolio Investors (FPI)
activity. After demonetization, Indian markets saw emergence of Domestic
Institutional Investors (DII) as the FPI selling during the demonetization moves was
adequately absorbed by the DIIs. As a result the loss in domestic markets during
the period of November-December 2016 was recovered in the month of January
2017 due to sustained buying from DIIs. Given the expected rise in movement of
Indian household saving into financial savings post demonetization, the
incremental financial savings would further increase importance of DII in Indian
markets going ahead.
vii. Current Account Deficit
India posted a current account deficit (CAD) of $3.4 billion, or 0.6% of gross
domestic product (GDP), in the July-September quarter, data released by the
Reserve Bank of India (RBI) showed.
The CAD in the second quarter was higher than the first quarter (April-June) CAD
of 0.1% of GDP but lower than the same quarter (July-September) a year ago at
1.7% of GDP. The contraction on a year-on-year (y-o-y) basis was primarily on
account of a lower trade deficit ($25.6 billion) brought about by a larger decline in
merchandise imports relative to exports. India’s merchandise exports and imports
turned positive in September and October after consistently declining since
December 2014—barring in June—because of sluggish global demand and low
commodity prices.
20
Figure 9: Q2 CAD at 0.6% of GDP
Net services receipts moderated on a y-o-y basis, primarily because of a fall in

earnings from software, financial services and charges for intellectual property
rights. Private transfer receipts, mainly representing remittances by Indians
employed overseas, amounted to $15.2 billion, having declined by 10.7% from
their level a year ago.
RBI in its monetary policy review in Dec’16 suggested, CAD is likely to remain
muted, notwithstanding some loss of remittances and software exports under the
“so-called invisibles category,” which refers to the trade that is not tangible.
However, rising crude oil prices may put some pressure on trade deficit. On a
cumulative basis, CAD narrowed to 0.3% of GDP in the first half (April-September)
of 2016-17 from 1.5% during the same period a year ago as trade deficit narrowed
to $49.5 billion from $71.3 billion during the comparable period.
Portfolio investment recorded a net inflow of $8.2 billion during the first half (April-
September) as against a net outflow of $3.5 billion a year ago. A widely anticipated
Fed interest rate hike in the US may lead to further outflow of portfolio investments
from India though analysts say it is unlikely to match the taper tantrum of 2013
which roiled Indian markets.
India's exports revived for the sixth straight month, as the country's merchandise
shipments overseas reported a double-digit growth during February. According to
data released by the Ministry of Commerce and Industry, the exports grew by
17.48% to $24.49 billion from $20.84 billion worth of merchandise shipped out
during February 2016.
21
However, the country's imports during the month under review increased by
21.76% to $33.38 billion from $27.41 billion worth of merchandise which were
shipped out in during the corresponding month of last year.
Consequently, the trade deficit during February reduced to $8.89 billion from $9.84
billion reported for the month before. On a year-on-year (Y-o-Y) basis, the trade
deficit stood at $6.57 billion during same month of 2016. The growth in exports is
positive for USA (5.61%), EU (1.68%) and Japan (10.87%) but China has exhibited
negative growth of (-6.20%) for December 2016 over the corresponding period of
previous year as per latest WTO statistics.
Cumulatively for the April-February period, exports rose marginally by 2.52% in

dollar terms at $245.4 billion, as against exports of $239.3 billion over the same
period last year.
Figure 10: Trade Deficit at $8.89 billion
Non-petroleum and non-Gems and Jewellery exports in February 2017 were

valued at $18.01 billion against $14.99 billion in February 2016, an increase of
20.15%. Cumulative imports for April-February were worth at $340.7 billion, which
was a 3.67% fall from $353.7 billion worth imports recorded for the same period of
22
the previous fiscal. India's oil imports during February were valued at $7.68 billion,
which was a massive 60.02% jump over oil imports valued at $4.8 billion in the
corresponding month of 2016.
Non-oil imports in February were up by 13.65%, to $25.70 billion, from $22.61

billion in the same month of last year. The merchandise trade deficit cumulatively
for April-February, however, declined by 16.65% to $95.28 billion, as against
$114.3 billion in the same period of 2015-16. As per RBI data, services exports
during January 2017 were valued at $13.57 billion, while imports stood at $8.4
billion, resulting in a positive trade balance of $5.16 billion.
Taking merchandise and services together, overall trade deficit for April-February
is estimated at $41.8 billion, which is 24% fall from the level of $55.02 billion during
the same period last year. The trade data suggest that exports have finally started
to recover, but much of the recovery in imports has been largely driven by higher
prices and not as much by volumes. In particular, low core import volumes are a
clear sign of still-subdued domestic demand.
viii. Inflation
Retail price inflation, measured by the Consumer Price Index (CPI), rose to 3.7%
in February 2017 from 3.2% in January 2017. Retail price inflation rose for the first
time after recording a fall in past six months. Inflation in both rural and urban India
witnessed an increase. Food inflation increased to 2.01% in February 2017 from
0.5% a month ago. The fuel & light group recorded a rise in inflation to 3.9% from
3.4% in the previous month.
Figure 11: Rate of Inflation (in percent)
23
Inflation at the wholesale level, measured by the WPI, rose to a 39-month high of
6.55% in February 2017 from 5.3% in January 2017. With that, the difference
between WPI and CPI inflation, which was merely 25 basis points in November
last year, has increased to 290 basis points in February this year, thus widening
the gap between the two (refer chart).
Inflation in the fuel group shot up to 21.02% in February 2017 from 18.1% in the
preceding month. The primary articles group also saw a 370 basis points increase
in inflation. On the other hand, inflation in the wholesale prices of manufactured
products declined to 3.7% from 4% in January.
ix. Rupee (₹)
The Indian rupee ₹ has been one of the best performing emerging market
currencies in the last few years resulting in significant outperformance of around
15% against emerging market basket and about 12% in REER terms in the last
three years. Indian Rupee emerged as the best performer amongst all the Asian
currencies in Asia in 2016. This, analysts suggest was, on the back of fortuitous
circumstances of decline in commodity prices resulting in lower imports and
healthy capital inflows post Modi (PM) victory amidst benign global liquidity. In fact
for all the forecasts of a sharp depreciation to 70 per dollar and beyond, the Indian
rupee barely budged in 2016, weakening by just 2.6%.
In the first half of March 2017 (until March 14 2017), FIIs had invested
US$2.4billion in the Indian equity (US$2.1 billion) and debt (US$0.3 billion)
markets, marginally higher than the total inflows garnered during the entire month
of February 2017 (US$2.4 billion). Moreover, this is in contrast to the outflows of
over US$10.3 billion recorded in November 2016-Janaury 2017, after the
announcement of the demonetization of high denomination currency notes.
Furthermore, the recent drop in global crude oil prices on concerns that supplies
will outweigh demand, has also benefited the INR, as this would dampen India’s
import bill. The price of the Indian basket of crude oil has eased from over US$55
a barrel in late February to around US$50 a barrel on March 15, 2017.
That such a stable performance came in a year marked with unprecedented

volatility in emerging market currencies amidst unexpected shocks is surprising.
The Indian rupee on 14th March 2017 surged to touch 17 month high against the
US dollar at 65.39 ahead of the key events in domestic as well as international
markets Gains in the rupee was also due to continued buying from FIIs in both
local equity and bond markets.
24
At the current level rupee is the third best performing Asian currency after South
Korean Won and Taiwanese dollar since the start of the calendar year. Foreign
investors pumped in over Rs 10,000 crore in the Indian capital markets in March
2017 so far.
Figure 12 : Rupee Movement in last one year
The chart shows two things: one, the sharp fall in the value of rupee last
December—that is as it should be, because the strength of the broad Dollar Index
should mean a weaker rupee. But then there was a sharp recovery in rupee on the
basis of a slightly weaker dollar. And very recently, rupee has strengthened in spite
of a stronger broad Dollar Index.
That means the rupee’s strength is based on domestic factors, with large portfolio
inflows attracted by India’s political stability, low current account deficit, lower
inflation and growth prospects.
Rupee also got an added fillip from bullish macro data, which showed that the
country's industrial production bounced back in January, expanding by 2.7% year-
on-year.
The momentum is likely to sustain unless there is global surprise emanating from
the US Federal Reserve. Custodian banks were seen selling the dollar on behalf
of their overseas clients but some state-owned banks were seen buying dollars
that initially helped check the rupee’s sharp rise. The dollar index had gained 3.6%
during the year and most emerging market currencies weakened by a greater
margin than the Indian currency.
25
The fact that the exchange rate moved in a narrow band in 2016 largely because
of deft intervention by RBI shows that perhaps the central bank too feels that 67-
68 to a dollar is the right level for the rupee. RBI, on an average, had bought or
sold around $6 billion every month in 2016 and intervened to a larger extent in the
forward market.
Forecasts for the rupee to weaken to 70/$ and beyond are back for 2017-18 as
well however going by the current surge in rupee to dollar rate rupee might just
keep growing stronger in 2017-18. If the rise in foreign exchange reserves is to be
relied upon, the central bank has been a net buyer of dollars so far in 2017. Foreign
currency assets rose by $2.6 billion in January and another $915 million in the first
week of February. It is clear that the RBI doesn’t want an appreciating rupee as
well.
If the tide turns, RBI could swiftly become a dollar seller too as it sits on a huge
pile of forex reserves. Additionally, the copious rupee liquidity makes it even easier
for the RBI to sell dollars.
Currency analysts believe, rising commodity prices, drying up of dollar inflows and
an expected rise in inflation to work against the rupee and forecasts it to fall to 72-
73 this year. However another analysis suggests that India’s strong
macroeconomic fundamentals, the rupee’s attractiveness as a carry-trade
currency and the fact that the nation’s exports to the U.S. account for only 2% of
its GDP, augur well for the exchange rate.
As per the latest FOMC’s commentary which signaled more than two rate hikes
this year, analyst believe the dollar is likely to strengthen.
Outlook for 2017-18: India
Economic growth in India is expected to stay high in Fiscal Year 2017-18 on the
strength of robust consumer demand from a general increase in wages that offsets
a slowdown in investment. The enactment of legislation to allow a national value-
added tax was a milestone reform that will create a much more integrated and
productive economy.
Ongoing efforts to restructure bank balance sheets to revive lending and reduce
excessive leverage at large corporations is setting the stage for a recovery in
investment spending likely to drive growth higher in FY2017-18.
Given the recent turbulence in the domestic economic environment and fast
changing global economy, the macroeconomic fundamentals of the economy
remain robust and augur well for the future.
26
Latest data points suggest that demand is recovering in the economy and the
Reserve Bank of India has also started to increase withdrawal limits. Growth is
expected to move up over the course of the next year and is likely to cross the 7%
mark again.
The government on its part has shown confidence in its existing approach and
schemes and increased allocations in a number of programs. The next step would
clearly be the effective implementation of these schemes, which can potentially
help the economy from a structural perspective. Schemes to alleviate skill
shortages are likely to also lead to a healthier job market that is in tune with the
changing times while increased rural spend is likely to bring about changes at the
supply side of the economy.
While there remain challenges on domestic front such as inflation and on the
international front due to geo-political concerns, the stage seems to be set for a
more sustainable growth process to take hold.
Agencies that have revised India’s growth projection downward after the note ban
may be forced to further scale down their projections for 2016-17 based on the
new information. IMF has cut its growth projection for India to 6.6% for 2016-17
and 7.2% in 2017-18, taking into account the impact of the note ban, however
predicts strong growth would persist despite new challenges and maintains that
India still remains a bright spot in the global landscape.
In addition, continued fiscal consolidation, by reducing government deficits and

debt accumulation, and an anti-inflationary monetary policy stance have helped
cement macroeconomic stability.
Table 3: India’s GDP Growth Projection – 2017 - 18
Agencies 2017-18
CSO 7.4%
ADB 7.4%
Fitch Ratings 7.7%*
RBI 7.4%
Moody’s 7.1%*
Morgan
7.7%*
Stanley
IMF 7.2%*
OECD 7.3%*
UN 7.7%*
World Bank 7.6%*
*figures represent calendar year 2017
27
While other International agencies also continue to remain positive on India though
have lowered their forecast for the year 2016-17 many still believe in the fact that
growth would accelerate in FY 2017-18 pegged at and around 7.4-7.6% as
economic activity is likely to bounce back on the back of strong fundamentals still
in place, implementation of reforms, easing monetary policy and credit conditions
and infrastructure spending.
More importantly, it is believed in the long run India may benefit immensely from
the increased digitalization of the economy and expansion of the formal banking
sector.
India is likely to gain momentum in the year to come as the results of earlier
measures are visible. The key factors which are likely to aid growth during the year
are the impact of the executive action addressing systemic issues in key sectors
like mining, railways, defense, banking, roads and power.
Further, the pay commission suggestion for hikes in payouts for government
employees coupled with continued accommodative stance and look out for
emerging room for more rates easing by the Apex bank is likely to bring in positive
sentiments and scope for expansion of the economy.
The prime minister’s strong leadership, the recent reforms and initiatives, and the
Reserve Bank’s prudent monetary policies are building up confidence among
investors. While credit conditions are expected to remain tight for some time,
improved business sentiment likely to drive up investment, which will likely be the
growth engine in coming quarters.
Nevertheless, expanding the formal economic grid and building a digital cashless
economy can go a long way in redefining India’s path to prosperity.
28
Section 2
29
Petrochemical Industry in India
Petrochemicals play a vital role in the functioning of virtually all key sectors of
economy which includes agriculture, infrastructure, healthcare, textiles and
consumer durables. Polymers provide critical inputs which enable other sector to
grow. Petrochemical products cover the entire spectrum of daily use items ranging
from clothing, housing, construction, furniture, automobiles, household items, toys,
agriculture, horticulture, irrigation, and packaging to medical appliances.
Per capita consumption of polymer has reached saturation level in US. India has
the advantage of high population and expected to maintain high economic growth.
This should propel India’s polymer consumption to new levels in coming year.
Figure 13: Per capita Polymer Consumption Vs per capita GDP ~ 2016
Petrochemical Industry Review of 2016 & Outlook for 2017
The global economic outlook continues to brighten a little, notwithstanding still-

elevated levels of policy and political uncertainties. It is expected United States
and commodity-exporting regions to drive a modest acceleration in world economic
growth. World real GDP growth is projected to pick up from 2.5% in 2016 to 2.9%
in 2017 and 3.1% in 2018.
The responsiveness of short-cycle US tight oil production to prices—and, in turn,

of prices to US production—is a core dynamic in the world oil market. It is expected
30
that US crude production will rise by more than 500,000 b/d over the course of this
year—a rise that the pledge of production restraint from OPEC, Russia, and others
is helping bring about. In addition to prices, the pace of service cost inflation and
extent of further productivity improvements are key factors that will influence US
tight oil output. Less appreciated is the significant production growth slated this
year and next from elsewhere in non-OPEC.
Outlook for Dated Brent steady at $58/bbl in 2017 and $57/bbl in 2018, based on
IHSMarkits’s view that world liquids demand and production will be closely
matched, on average, this year and next. Yet the softening of prices in recent days
highlights downside risks to IHS price outlook—not the least of which is the
continued resilience of US supply.
It is expected that regions such as Northeast Asia, Southeast Asia, the Middle
East, and Indian Subcontinent will start investing in new ethylene capacity.
Ethylene demand is expected to grow for the forecast period even in a lower near-
term global GDP scenario. Steam cracker nameplate operating rates will be
around 89–92% with a peak in 2019 as supply is forecast to come on stream too
slowly to meet demand growth.
In 2016, the global demand for 30+ commodity chemicals and plastics totaled
1,128 million metric tons. This demand is forecast to grow over 200 million metric
tons at an average pace of about 3.5% over the coming five years, a rate that is
very close to the 3.4% level seen for the historical period 2011-2016. About half of
this growth will be focused on the broader Asia Pacific region, with the lion’s share
(35%) concentrated in China.
Thus despite forecasts for a slowing economy China remains the dominant driver
of global demand. As a result, by 2021, 37% of global demand will be in China.
This aligns with a forecast average growth rate of domestic demand of just under
5%, 3% below the 2011-2016 average pace. The remaining 50% demand growth
is split roughly evenly between the Middle East, N. America and other. West
Europe is forecast to grow only mildly as the structural issues impacting the
broader economic outlook translate into tepid chemical demand growth.
For most of 2016, Asian polyethylene (PE) markets were generally on a stable to
firm price trend with a couple of fluctuations at certain periods. A growing concern
among market participants in Asia now is whether a similar price trend can be
replicated in 2017 amid mounting pressure from additional global capacities.
The OPEC and non-OPEC oil-producing nations’ decision to cut oil production
boosted crude prices in late 2016 and led PE suppliers to increase their offers in
the Asian markets.
31
However, while producers raised prices based on feedstock costs, converters

lamented that plastics demand in key sectors such as packaging, consumer goods
and construction had been subdued throughout 2016 amid dull macroeconomic
conditions. Subdued demand is expected to last through 2017.
Supply tightness amid resumed restocking activities in China after the Golden
Week holiday in October 2016 had pushed prices up substantially, particularly for
low density polyethylene (LDPE). Producers from Saudi Arabia, Iran and across
the Middle East, from Southeast Asia and India allocated more cargoes to China
for better netbacks.
True enough, Chinese prices softened nearer to the Lunar New Year holiday,
which falls at the end of January 2017, amid falling LLDPE futures prices and a
slowdown in trading activity.
Although some suppliers expected the drop in PE prices in Asia to be minimized

by firm regional naphtha and ethylene costs, some were worried that ample
additional global polymer capacities would create supply pressure and weigh down
prices in 2017.
India-origin export PE cargoes are expected to be available in China, and

potentially Southeast Asia, on a regular basis in 2017. The region’s approximately
2m tonnes/year of PE expansion plans would prompt Indian producers to export
PE cargoes to other Asian regions, mainly to China and Southeast Asia, as
domestic demand alone will not be able to absorb the additional supply.
In the meantime, India’s import demand has been subdued following the
demonetisation exercise in November which halted trade in the region as a
majority of trade is typically done on a cash basis.
On the supply side, India’s ONGC Petro additions Limited (OPaL) started its two
HDPE/LLDPE swing units with nameplate capacities of 360,000 tonnes/year each
and a 340,000 tonnes/year stand-alone HDPE facility in the February of 2017.
India’s Reliance Industries is also expected to start-up its LDPE and LLDPE/HDPE
units with a combined capacity of 1.1m tonnes/year in the first half of 2017.
Overall demand-wise, a slow-moving consumer goods sector, and persistent weak

downstream demand for finished goods in the first half of 2017 is expected to exert
downward pressure on polymer prices in the region. In the meantime, generally
weak Southeast Asian currencies are likely to continue to hamper imports in 2017.
India may turn into a net exporter of polyethylene (PE) in the second half of 2017,
as the country will welcome hefty new capacities in the western state of Gujarat.
32
The possible target export markets are China, Turkey, Africa and Southeast Asia
as India’s domestic PE capacity will increase by 2.01m tonnes by mid-year.
The expected increase in India’s overall PE capacity is higher than its recorded
total PE imports in the fiscal year ending March 2016. The country, which has a
current PE capacity of more than 3m tonnes/year has always been an importer of
the polymer until late last year, when a domestic cash crunch prompted PE
producers to tap the export market to offload inventory.
By the second half of the year, however, India’s PE capacity will have outpaced
domestic demand, making exports necessary for its local producers. PE products
would most likely be marketed into Asia, particularly China, which has a strong
demand for the material.
In December 2016, major Indian producer RIL spearheaded the PE exports due to
a severely weakened domestic demand after the government’s surprise
demonetisation of the rupee (Rs) 500 and Rs1000 notes, which accounted for
more than 80% of the money in circulation at that time.
In fact, weak local demand in December 2016 presented a good opportunity to

venture into global markets to establish a customer base for PE when new facilities
start commercial production in 2017. GAIL India Ltd (GAIL), had also forayed into
exports for the first time late last year, with a few consignments sent to Southeast
Asia, where netbacks are better. The company’s 400,000 tonne/year
LLDPE/HDPE swing facility resumed operations in January 2017, after more than
a month of shutdown following technical issues at the unit’s reactor. The plant was
commissioned in March last year.
Meanwhile, new PE producer OPaL is also keen to export to China and Southeast
Asia when it is able to establish distribution channels sometime in the second half
of 2017. There is a strong likelihood that imports of these polymers will
substantially fall when the new domestic capacities start up.
In fact, Indian economy has turned the cornerstone and it’s once again on the
growth path. Globally India is being looked at as the bright spot in the global
economy. Consumer sentiments are high and growth expectations are reasonable
well, which augers well with the petrochemical industry whose growth has a direct
relation with the economic growth.
For the Indian petrochemical industry in 2015-16- the key application industries
like packaging, construction, and automobiles actually helped pull up the demand
and declining prices resulted in higher offtake by downstream converters for
virtually all polymers.
33
Government of India’s initiatives like Digital India, Swachh Bharat, Start-up India
and Skill development program etc. have started and will eventually a widespread
multiplier effect. One can expect them to fuel petrochemical demand in India in
the years to come.
India witnessed a rebound in auto sales in the second half of 2016 and the trend
is expected to continue in 2017 as well as passenger vehicles recorded a growth
of 9% in February 2017 and within PVs the UV sales registered a jump of 22% and
Van segment at 8%. CV sales surged by more than 7%, M&HCV registered 5%
while LCV segment climbed up by 9%. International markets proved to be lucrative
for Indian vehicle makers in February 2017, when India’s vehicle exports surged
by 11.84%.
Success of ‘Make in India’ programme will be a game changer and a big boost to
manufacturing in the country. Increased focus on agriculture and irrigation will
boost the demand for plastics along with GOI’s thrust on infrastructure followed by
a good monsoon forecast in 2017 by IMD.
A few of the many such initiatives that are likely to result in new opportunity for
industries and positively push the demand for petrochemicals are: Rapid
expansion of Metro Rail Projects across the country and electrification of existing
& addition of new railway lines. The government has set a target of constructing
15,000 km of highways in the next financial year, 50% more than that in the current
fiscal. The launch of Smart Cities and emphasis on Rural Development, expected
to have a huge demand push for overall petrochemicals sector.
Last but not the least, the likely highly anticipated roll-out of Goods and Services
Tax (GST) roll-out in 2017 would have a very positive impact on the way business
is conducted.
The opportunities are huge, and the petrochemical industry stands to benefit in a
big way. These proposals and the focus to support the start-ups will also go a long
way in encouraging domestic manufacturing and demand.
A number of Indian state-owned energy companies are making major investments

to boost their petrochemical activities and are expected to become significant
players in the sector. Capacity expansions by several other manufacturers are
moving ahead and gradually filling the gap between domestic demand and supply.
Overall, the outlook for the petrochemical industry in India is somewhat more
positive than it has been recently, as growth in GDP and industrial output is
expected to be higher in 2016-17 than in the prior year, and key end-use industries
like automotive, packaging, and consumer durables reflect this outlook.
34
Monomers
A. Ethylene & Propylene
Ethylene Capacity is further going to increase from 3907 KT in 2015-16 to 4842

KT by 2016-17. In 2015-16, production of ethylene and propylene was 3870 KT
and 4590 KT respectively as shown in table below. Ethylene Production had
declined in 2014-15 with respect to slow down in production at Haldia plant
however in 2015-16 witnessed a rebound to touch 3870 KT. The capacity is
however expected to touch 7212 KT in 2017-18 with the new capacity lined up by
RIL, GAIL BCPL and OPAL. Availability of Ethylene is set to rise to 7200 KT by
2017-18 from 3895 KT in 2015-16.
Table 4: Ethylene & Propylene net availability
Ethylene (KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E

Capacity 3515 3907 4842 7212
Production 3450 3870 4780 7200
Imports 60 25 50 0
Exports 0 6 0 10
Net Availability 3510 3895 4830 7200
Propylene (KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E
Capacity 4230 4601 4773 4842
Production 4020 4590 4770 4840
Imports 0 0 0 0
Exports 10 10 15 0
Reliance Industries is constructing a 1.5-million m.t./year ethylene plant, expected

on-stream in 2016-17 which will crack refinery off-gases. Reliance will also adapt
its 860,000-m.t./year ethylene plant at Hazira, originally designed to work on
naphtha, to partly use gas. The new Jamnagar cracker will raise Reliance's HOPE
total ethylene capacity to 3.4 million m.t./year. Separately, ONGC Petro additions
Ltd. (OPaL), a JV among ONGC, Gail, and Gujarat State Petroleum Corp.,
complex’s' at Dahej having ethylene plant will be a dual-feed cracker with capacity
for 1.1 million m.t./year of ethylene by 2017-18.
Propylene capacity as mentioned in the table above had witnessed a dip in 2014-
15 owing to slow down at Haldia plant to 4230 KT however saw a surge in capacity
numbers owing to capacity addition by RIL (Hazira) Haldia, and HMEL at 4601 KT
in 2016-17 and it is further expected to increase to 4773 KT in 2016-17 with
capacity additions lined up by OPAL, GAIL and BCPL Assam. Production in 2016-
17 is also expected to touch 4770 KT from 4590 KT in 2015-16.
35
State-run Bharat Petroleum, which expects to finish work on its 15.5-million tonne
refinery expansion in Kochi by December and commission it in the fourth quarter,
may look at further increasing its capacity to 22 MT. The expansion is expected to
increase BPCL’s naphtha production by 10%-15%, which would enable the refiner
to restore monthly exports from Kochi on the Indian southwest coast, to two
cargoes.
BPCL is set to boost its naphtha exports next year as per industry sources. But the
increase in exports from Kochi would only last for around a year, as naphtha would
be diverted as feedstock into BPCL’s new petrochemical project as per source.
The propylene derivatives petrochemical project in Kochi is expected to be

completed around the end of next year, and is due for commissioning around the
first-quarter of 2018 - industry sources.
It will have the capacity to produce 47,000 mt/year of acrylic acid, 92,000 mt/year
of oxo-alcohols and 190,000 mt/year of acrylates and will require 250,000 mt/year
of propylene to produce 329,000 mt/year of petrochemicals
B. Butadiene
Sharp decline in crude prices and continued soft demand for synthetic rubber,
coupled with new capacities led to Butadiene prices under pressure till mid-August
2016 before witnessing a gradual climb because of turnarounds. The recent rapid
and, since August’16, relentless increase in butadiene prices in Asia is forcing
some consumers to think about cutbacks.
Spot prices climbed from $1,000/tonne to more than $2,500/tonne as supply
tightened.
Butadiene has been here before with price volatility driven by tightened supply and
market sentiment underpinned by steadily increasing downstream synthetic rubber
demand.
The demand for butadiene registered a robust growth of 40% in 2015-16 however
is expected to witness a slowdown in growth rate maintain around 26% growth in
next two years.
ONGC Petro Additions (OPaL) has begun exports to Singapore and intends to float
a tender soon for exporting more products to other countries. The first consignment
of butadiene was shipped to Singapore in March 2017, and the company wants to
export more products benzene, etc. to other countries as well for which it will be
floating tenders. OPAL is expected to add 115 KT in 2016-17 taking total capacity
to 550 by 2017-18. Production is expected to increase in line with the new capacity
36
addition taking place and is expected to increase from 318 KT in 2015-16 to 550
KT by 2017-18.
Table 5: Butadiene Demand Supply
Butadiene (KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E

Capacity 435 435 550 550
Production 229 318 416 550
Imports 0 6 6 6
Exports 46 79 96 164
Apparent Demand 172 241 306 386
Demand Growth% 43.4% 40.1% 27.0% 26.1%
There was an exportable surplus of 79 KT in 2015-16, which is expected to

strengthen further and touch 164 KT by 2017-18. There are few imports expected
going forward in next fiscal.
C. Styrene
The demand for styrene has significantly increased since 2010, after the chemical
market recovery from the global economic slowdown. The entire demand for
styrene is met through imports due to lack of any production facilities within the
country. This makes the demand susceptible to international fluctuations in prices
as well availability of styrene.
India’s total imports for Styrene was 617 KT in 2015-16 growing at a whopping
13%. Imports for Styrene are projected to increase by ~7% to 6% and expected to
reach 750 KT in 2016-17 and further to 795 KT in 2017-18.
Table 6: Styrene Demand Supply
Styrene (KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E
Imports 617 697 750 795

Exports 0 0 0 0
Apparent
Demand
617 697 750 795
Demand
Growth%
7.9% 13.0% 7.6% 6.0%
37
Polymers
The Indian domestic polymer industry (like global industry) is dominated by

Polyolefin’s (PE & PP), representing about 73% of all commodity resins consumed
in 2015-16. After clocking a growth of 7% in 2014-15 the polymer growth in India
grew at a staggering high of 15% in 2015-16. Domestic demand is expected to
outpace domestic production in coming years too.
Table 7: Polymer Demand Supply
Polymers (KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E

Capacity 9022 9496 11747 12747
Production 7907 9248 9822 12113
Op Rate (%) 88% 97% 84% 95%
Import 3330 3711 4175 4007
Exports 797 882 833 2014
Net Trade -2533 -2829 -3342 -1993
Demand 10004 11553 12453 13525
Demand Growth % 6.9% 15.5% 7.8% 8.6%
Polymer import dependency remained high at 32% in 2015-16 and is expected to

come down in next two years to ~30%. PP exports was around 701 KT in 2015-
16. PE imports in 2015-16 stood at 1650 KT and PVC imports were at 1362 KT in
the same period. In 2015-16 net trade deficit of total polymers stood at 2829 KT
which was higher than previous year which stood at 2533 KT. However, trade
deficit is expected to rise to 3342 KT in 2016-17 and decline to 1993 KT in 2017-
18.
However, the demand for polymers is expected to grow at ~7% in 2015-16 and
see a double digit growth of ~13% in 2016-17. India’s petrochemical industry, like
the overall economy, faces near-term challenges, but the long-term growth outlook
for the industry remains positive. Capacity expansions by several other
manufacturers are moving ahead.
Intermediates
A. EDC and VCM
Almost the entire production of EDC and VCM in India are consumed captively by
the polymer manufacturers for production of PVC and hence, PVC manufacturers
who do not have facilities for captive production of EDC and VCM have to rely
entirely on imports to meet their demand for PVC building blocks viz. EDC and
VCM.
38
Table 8: EDC & VCM Import into India
EDC (KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E

Capacity 205 205 205 205
Production 172 191 191 187
Imports 518 595 600 610
Exports 0 0 0 0
Growth (%) 13.7% 13.9% 0.6% 0.8%
VCM (KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E
Capacity 906 981 981 981
Production 865 939 928 964
Imports 375 448 485 484
Exports 0 0 0 0
Growth (%) -2.8% 8.3% 1.9% 2.5%
EDC witnessed a double digit growth of 13.9% in 2015-16 after a 13.7% growth in
2014-15. However is coming two years it is expected to witness a flat growth of
around 1%. While VCM witnessed a rebound from a negative growth of 2.8% in
2014-15 to a staggering 8.3% in 2015-16 and is forecasted to remain around 2-3%
level in 2016-17 and 2017-18. In case of EDC imports, there is once again a surge
expected going forward in 2016-17 to 600 KT from present imports of 595 KT in
2015-16. Imports in case of VCM is expected to increase from 448 KT in 2015-16
to 485 KT in 2016-17.
Polyolefins
All PE registered a robust demand growth of 15.7% in 2015-16. It is expected that

PE will see a healthy growth of 9% in next two fiscals. PP registered a staggering
demand growth of 19% in 2015-16 and it is expected to witness an average growth
of 7% in next two years. Polyolefins registered a robust demand growth of 17% in
2015-16 and is expected to improve to 8% average over next two fiscals.
Table 9: Polyolefin Demand in India Actual & Projected
(KT) Actual Projected % Change year on year

2014-15 2015-16 2016-17 2017-18 2015-16 2016-17 2017-18
LDPE+EVA 658 821 861 1025 25% 5% 19%
LLDPE 1328 1542 1695 1820 16% 10% 7%
HDPE 1828 2038 2239 2338 11% 10% 4%
PP 3509 4192 4395 4765 19% 5% 8%
Total PO 7323 8593 9190 9948 17% 7% 8%
Source: Industry Estimates. A: Actual, E: Estimate
39
The ONGC Petro additions Ltd (OPaL) commissioned its mega petrochemical
complex at Dahej in Feb 2017 and started production in some of its units.
The 1,100 KT capacity dual feed cracker unit has been operational and in Feb it
delivered its first consignment of about 40 tons. The plant that was to be made
operational in 2014, but was marred by several delays along with cost escalation.
OPaL would be ramping up its capacity in the coming months. It is currently

operating the polypropylene (PP) unit at 50% capacity. But it is expected that in
about four months from Feb 2017, the plant will operate at 100% of its capacity of
340 KT per annum. The polyethylene (PE) plant too will operate at full capacity
from the current 50% production within few months. OPAL now has annual
capacity of 14 lakh metric tonnes of polymers, low and high density polyethylene,
polypropylene and 5 lakh metric tonnes of benzene, butadiene and pyrolysis
gasoline etc.
Mangalore Refinery and Petrochemicals Ltd (MRPL), a subsidiary of Oil and

Natural Gas Corporation Ltd (ONGC) which began commercial production of
polypropylene in 2015 from its new unit as a part of its phase III expansion plan
will add 110 KT of PP as the plant comes to full capacity in 2016-17. The plant has
capacity to produce 440,000 tonne per annum (TPA) of polypropylene.
Meanwhile in Assam State, in the far north-east of the country, Brahmaputra

Cracker and Polymer Ltd. (BCPL), 70%.owned by Gail, commissioned a complex
in November 2015 based around a 220,000- m.t./year ethylene and 60,000-
m.t.lyear pro-pylene plant. The complex will also produce 226,000 m.t./year of
LLDPE-HDPE and 60,000 m.t./year of PP by 2016-17.
Indian Oil Corporation Ltd commissioned its 15 million tons per annum (mtpa)
refinery at Paradip in Odisha. The PP project at Paradip is designed co-produce
700,000 m.t./year. The company currently has 650,000 m.t./year of PP capacity at
Panipat, Haryana State. Odisha government’s move to withdraw tax breaks to
IOCL’s 15 million tonne Paradip refinery is likely to cost the state about Rs 50,000
crore of investments with the refinery major taking a second look at its investment
plans for the state.
Indian Oil’s two major proposed investments which will be given a second thought
are a petroleum coke gasification and downstream product manufacturing capacity
costing Rs 15,000-20,000 crore and an expansion of the refinery itself for another
Rs 10,000-15,000 crore. A third project—a MEG production facility at a cost of Rs
4,100 crore —will also be reviewed. LPG bottling plants and marketing terminals
are among other planned projects that will be reconsidered.
40
Gail is also doubling ethylene capacity at the company's gas-based

petrochemicals complex at Pata, Uttar Pradesh State, to 900,000 m.t./year and
adding 450,000 m.t./year of LLDPE- HDPE, which will double its capacity for PE.
Meanwhile, OMCs—Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd (BPCL) and
Hindustan Petroleum Corp. Ltd (HPCL)—plan to jointly build a 60 million tonnes
per annum (mtpa) refinery at a cost of Rs1.5 trillion in two phases of 40 and 20
mtpa. The OMCs will form a special purpose vehicle for the project. While Indian
Oil will hold a 50% stake, HPCL and BPCL will hold 25% each.
The 60-million tonne a year refinery and a mega petrochemical complex will be set
up in two phases. The mega complex will require 12,000-15,000 acres and two-
three sites on coast of Maharashtra are being explored. The second phase,
involving a 20-mt refinery, will cost Rs 50,000-60,000 crore.
The refinery being planned by the state-owned firms will be bigger than that. The
phase-1 itself will be bigger than any one single unit. India has a refining capacity
of 232.06 mt, which exceeded the demand of 183.5 mt in 2015-16.
Vinyl’s: PVC
The demand for PVC increased substantially 2015-16 from a single digit growth of
6% in 2014-15.
Table 10: PVC Demand Supply
PVC (KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E

Capacity 1390 1470 1482 1482
Production 1256 1362 1388 1423
Imports 1172 1335 1608 1865
Exports
Demand Growth% 5.8% 10.5% 10.7% 10.0%
As the economy is expected to perform well with the easing of monetary policy and
various PVC end use sectors performance improving after the demonetization
effect. PVC demand is expected to see a sustained growth in coming years. It is
expected to maintain almost the same growth rate in 2016-17 and 2017-18 and
sustain 10% plus growth rate levels.
In case of cPVC, capacity expansion is expected by DCW Ltd in next fiscal around
12 KT which will take the total PVC capacity to touch 1482 KT from 1470 KT in
2015-16. Reliance Industries underwent debottlenecking at its PVC complex at
Dahej and now the capacity stands at 750 KT capacity for 2015-16. Meanwhile,
41
PVC imports are expected to increase further from 1355 KT in 2015-16 to 1608 KT
in 2016-17 and 1865 KT in 2017-18.
Styrenics
A. Polystyrene
After witnessing a negative demand growth in 2013-14, demand for PS increased

by ~9.8% in 2014-15 to touch 238 KT, as shown in table below. In 2015-16 the
demand for PS maintained same level of growth and touched 261 KT.
However expected to witness a slowdown to around 5.4%-5.5% in next two years

i.e. 2016-17 and 2017-18 to touch 275 KT and 290 KT respectively.
Total Polystyrene capacity in India is expected to increase and reach 490 KTA by
2017-18 with LG polymers planning to expand capacity in 2016-17 and 2017-18
by 118 KT. Other major producers of polystyrene in India include Supreme
Petrochem and Styrolution India.
Table 11: Polystyrene Demand Supply
Polystyrene (KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E
Capacity 472 476 490 490

Production 270 308 325 340
Imports 13 20 20 20
Exports 42 71 70 70
Demand Growth% 9.8% 9.7% 5.4% 5.5%
B. Acrylonitrile-Butadiene-Styrene (ABS)
ABS, the third-largest styrene derivative, is the largest-volume engineering

thermoplastic resin in the world. ABS is used in many consumer-related end-use
applications including appliances, electronics/electrical, building and construction,
and transportation.
ABS demand in India is expected to grow strongly at 10%, owing to the growth in
the Indian middle class expenditure in home appliances and automobiles, which
will drive the core demand for ABS.
The appliance sector will continue to be the largest ABS end-use market. Demand
for ABS registered a healthy growth of 10% in 2015-16 and expected to continue
to grow around 10% in 2016-17 and 2017-18.
42
Both the manufacturers in India INEOS Styrolution India Ltd and Bhansali
Engineering Polymers Ltd. witnessed capacity addition in 2015-16 by 20 KT and
15 KT respectively, making the total capacity of the industry touch 190 KT which
is expected to remain same for coming two fiscals.
Table 12: ABS Demand Supply
ABS (KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E
Capacity 155 190 190 190

Production 102 112 120 130
Imports 64 71 80 90
Exports 0 0 0 0
Demand Growth% 9.9% 10.0% 9.6% 10.0%
C. Styrene-Acrylonitrile (SAN)
SAN has been witnessing healthy growth due to its wide ranging usage in
consumer electronics, appliances and automotive sector.
Table 13: SAN Demand Supply
SAN (KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E
Capacity 130 150 170 170

Production 87 94 117 126
Imports 7 8 8 9
Exports 0 0 0 0
Demand Growth% 5.6% 8.0% 23.4% 7.7%
Demand for SAN surged to 8% in 2015-16 and further it is expected to grow at a

staggering rate of 23% in next fiscal 2016-17 with capacity addition touching 150
KT. It is expected there will be an increase in demand of SAN grades, with a focus
on consumer and industrial applications. Imports are expected to touch between 8
KT to 9 KT in next two fiscals to meet the rising domestic consumption demand.
PET (Polyethylene Terephthalate)
Indian PET resin market is highly consolidated and dominated by three major
players, Reliance Industries Limited (RIL), Dhunseri Petrochem Limited (DPTL)
and JBF Industries Limited. In FY15-16, M/s Indorama Ventures Limited acquired
43
Micro PET 210 KTA & DPTL. Reliance Industries is the largest player in the
country’s PET resin market and is expected to maintain its leadership position
through 2016-17.
In 2015-16, Reliance Industries Limited commissioned a new PET resin facility at

Dahej, Gujarat. The plant consists of two lines with a combined manufacturing
capacity of 648 KTA, based on Chemtex technology for Continuous Polymerization
and Buhler Technology for Solid State Polymerization.
This is one of the largest bottle grade PET resin capacity at a single location
globally. This consolidates Reliance’s position as a leading PET resin producer
with a global capacity of 1.15 MMTPA. New capacity addition by Reliance will
greatly help the downstream bottle and packaging industry in meeting the
increasing demand from India and the region.
India's polyethylene terephthalate demand is expected to rise at a compound

annual growth rate of 17%-15% over the next five years on the back of strong
economic and population growth -- far outpacing the expected growth of 4%-5% in
global demand. The fast pace in India's demand growth is also expected to lift the
compound annual growth rate of Asia's PET consumption to 6%-8% over the same
period.
India's PET demand has surged significantly in recent years, rising to 710,000
mt/year over 2014-2015, from 600,000 mt/year over 2012-2013. And demand is
forecast to surge to 900,000 mt/year in 2016-2017. Another main driver behind
India's PET demand growth is more widespread use of PET packaging in the
beverage sector in India, as most non-alcoholic beverages are currently packaged
in PET bottles across Asia. Further growth is also seen from an expected large
increase in PET processing and its applications within Asia.
Currently, PET bottles are used primarily in the pharmaceutical sector for over-the-
counter medicine such as cough syrups, antacids and vitamins, where demand is
around 80,000 mt/year in 2015-2016 in India. Future growth opportunities for PET
were also abundant as it had many other potential packaging applications such as
for non-bottle applications and thin-wall moulded items. PET could also potentially
replace polypropylene if its characteristics could be modified further. The demand
for PET bottle packaging of milk and milk products is growing at around 25-30%
CAGR.
In 2014-15, the overall growth for PET industry in India was constrained by high
volatility of prices and reduced liquidity with customers. Due to the above
mentioned reason and concerns from pharma and liquor companies for use of PET
the demand was subdued at 6% in 2014-15.
44
Table 14: PET Demand Supply
PET (KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E

Capacity 1140 1765 1815 1915
Production 880 1280 1400 1625
Imports 150 86 80 50
Exports 330 595 660 540
Demand Growth% 6.1% 10.0% 16.9% 15.0%
However in 2015-16 there was a rebound and demand grew at 10% and further in
next two fiscals with new capacity addition and growing demand for consumer
goods and government’s various initiatives such as Make in India etc. would
encourage domestics manufacturing and demand is expected to grow at double
digits and touch 1035 KT in 2017-18. India’s PET capacity is expected to touch
1815 KT by 2016-17 from 1140 KT in 2014-15 and this is expected to reduce the
imports and boost exports going forward by 2016-17 and 2017-18.
Aromatics – Paraxylene
PX demand growth rebounded in 2015-16 and witnessed a staggering growth of

32% owing to capacity addition by MRPL and RIL and is expected to grow at
around 22% in next fiscal. PX demand is expected to grow at a robust pace of
~32% with lined upcoming capacities.
With the commissioning of this plant, RIL’s PX capacity would more than double
from 2.0 million tons to 4.2 million tons per annum. On commissioning of entire PX
capacity, Reliance will be the world's second largest PX producer with 9% of global
PX capacity and 11% share of global production.
The new PX capacity will add value to the output from refineries and improve the
profitability of the Jamnagar complex. The new capacity will complete the
integration within Reliance's polyester value chain, leading to improved margins
and also strengthen its position in polyester industry globally.
Commissioning of the new PX plant marks beginning of the culmination of a series

of projects including the refinery off-gas cracker, ethane import project and petcoke
gasification.
PX import’s stood at 799 KT in 2015-16 and it is expected to increase to 1179 KT

in 2016-17 and see a decline in 2017-18 to 800 KT. Meanwhile exports are
expected to increase from 837 KT in 2015-16 to 839 KT in 2016-17 before
witnessing a robust growth and would touch a high of 1836 KT by 2017-18.
45
Table 15: Paraxylene Demand Supply
(KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E

Capacity 3009 3392 3662 5643
Production 2813 3338 3296 5040
Imports 699 799 1179 800
Exports 1066 837 839 1836
Demand Growth% 6.3% 31.8% 22.5% 0.0%
Fibre Intermediates
In 2015-16, the combined production of fibre intermediates viz. ACN, Caprolactam,

PTA and MEG reached 5967 KT of which PTA and MEG constituted% and 18%
respectively with ACN and Caprolactam together accounting for the remaining 4%.
Table 16 : Fibre Intermediate Demand Supply
ACN 2014-15 A 2015-16 A 2016-17 E 2017-18 E

Capacity 40 0 0 0
Production 34 0 0 0
Imports 118 160 170 180
Exports 0 0 0 0
Demand 152 160 170 180
Demand Growth (%) 3.4% 5.3% 6.3% 5.9%
Caprolactam
Capacity 70 70 70 70
Imports 13 45 58 60
Exports 0 0 1 0
Demand 101 131 144 147
Demand Growth (%) 5.4% 29.7% 9.9% 2.1%
PTA
Capacity 3930 5652 6226 7476
Production 3596 4619 5368 6582
Imports 1045 697 361 60
Exports 0 172 268 775
Demand 4641 5144 5461 5867
Demand Growth (%) 5.5% 10.8% 6.2% 7.4%
MEG
Capacity 1200 1200 1200 2160
46
Production 960 1102 1110 1819

Imports 982 1039 1167 780
Exports 68.6 72 75 239
Demand 1873 2141 2277 2599
Demand Growth (%) 1.8% 14.3% 6.4% 14.1%
PTA and MEG constituted 40% and 60% of the total 1736 KT fibre intermediates
imported in 2015-16. Fibre intermediates exported from India in 2015-16 was 244
KT and is expected to jump to 344 KT in 2016-17 and 1014 KT in 2016-17 with the
addition of new PTA capacity from RIL and JBF. ACN production was stopped by
RIL and demand is being met by imports on the back of pesticide industry doing
well. PTA import volumes into India (which is another big and growing polyester
market in Asia) are also expected to decline after the new plant by Reliance
Industries runs at full capacity and touch 361 KT by 2016-17 and further witness a
dip by 2017-18 to touch 60 KT.
IOCL, meanwhile has planned glycol project - the Mono Ethylene Glycol project
includes Ethylene Recovery Unit of 180 KTA and Glycol Unit of 326 KTA. This
plant is targeted for commissioning by November 2019. Two more projects have
been planned for the petrochemical complex -- 1,200 ktpa PTA plant and petcoke
gasification-based synthetic ethanol plant. Both projects are due to be
commissioned by September 2021.
Caprolactam, which is used to manufacture automobile tyre cord, should benefit

from an increase in discretionary spend, once the global economy returns to the
growth path. At present, GSFC is the largest (56% share) and one of the only two
manufacturers of the chemical in India with 70,000 tonnes per annum production
(full capacity), of which around 17,000 tonnes is used internally for production of
nylon and the rest is sold. The company has also taken debottlenecking and
efficiency improving measures to further improve the EBIT by around Rs 75 crore.
Demand for nylon 6, which uses caprolactam as a raw material, remained largely
unchanged. Caprolactam prices have been rising over the past few months (Dec
2016) after the shutting down of capacities in Europe and America. Global
chemical majors such as BASF and Fibrant have closed their capacities due to
falling profitability from rising capacities in Asia.
Tight supplies and rise in caprolactam's raw material prices -benzene and crude-
led buyers to rush to acquire the chemical. In 2015-16 demand for caprolactam
grew at a staggering ~30% and is expected to grow at 10% next fiscal before a
slowdown in 2017-18 to grow at 2%.
47
Synthetic Fibres
In 2015-16, the combined production of synthetic fibre (PSF, ASF, PPSF, PFY,
PPFY, VFY, VFS and NFY) reached 4317 KT. The demand growth was at 4% in
2015-16. It is expected that the fibre demand growth would be around 3-6% in next
two years. The capacity in 2017-18 is expected to increase to 6975 KT before a
dip in 2016-17 to 6724 KT.
Table 17: Demand Supply Balance of Synthetic Fibre
2014-15 A 2015-16 A 2016-17 E 2017-18 E
PSF
Capacity 1260 1260 1260 1404
Production 953 974 979 1123
Imports 46 59 59 30
Exports 183 160 180 220
Demand 862 932 917 963
Demand Growth (%) 3.2% 8.1% -1.6% 5.0%
ASF
Imports 34 34 34 34
Exports 20 20 20 20
Demand 101 101 101 101
Demand Growth (%) -11.3% 0.0% 0.3% 0.0%
PPSF
Production 4 4 4 4
Imports 1 1 1 1
Exports 11 11 11 11
Demand 5 5 5 5
Demand Growth (%) 10.0% 0.0% 0.0% 0.0%
PFY
Capacity 4623 4731 4666 4746
Production 2766 2747 2905 3062
Imports 25 21 27 15
Exports 168 118 126 115
Demand 2608 2665 2751 2926
Demand Growth (%) 3.3% 2.2% 3.2% 6.4%
48
PPFY
Imports 1 2 2 2
Exports 2 2 2 2
Demand 11 14 14 14
Demand Growth (%) -0.3% 22.0% 0.0% 0.0%
VSF
Capacity 490 490 490 490
Production 364 364 364 364
Imports 27 34 36 36
Exports 130 154 144 144
Demand 268 305 339 370
Demand Growth (%) -3.5% 13.5% 11.1% 9.3%
VFY
Imports 16 10 10 10
Exports 6 0 0 0
Demand 54 55 60 65
Demand Growth (%) 2.2% 1.1% 9.1% 8.3%
NFY
Imports 2 2 2 2
Exports 2 2 2 2
Demand 52 52 52 52
Demand Growth (%) 15.6% 0.0% 0.0% 0.0%
Surfactants
Demand for key surfactant LAB increased by 5.3% in 2015-16 and is expected to
grow at a higher rate at 7% in next fiscal. LAB capacity witnessed an addition of
20 KT by IOCL in 2015-16 and with witness another 20 KT addition in next fiscal
as well taking the total capacity in India to 570 KT in that year. LAB import is were
higher in 2015-16 as compared to previous year at 189 KT however will see a dip
in next year to touch 167 KT in 2016-17 before spiking a high of 177 KT in 2017-
18. Exports are also expected to remain at same level of 6 KT in 2015-16 till next
two fiscals.
49
Table 18: Demand & Supply of LAB & EO
LAB 2014-15 A 2015-16 A 2016-17 E 2017-18 E

Capacity 530 550 570 570
Production 415 377 438 454
Imports 124 189 167 177
Exports 24 6 6 6
Demand 531 559 598 628
Demand Growth (%) 4.3% 5.3% 7.0% 4.9%
EO 2014-15 A 2015-16 A 2016-17 E 2017-18 E
Capacity 253 268 268 268
Production 188 194 201 209
Imports 0 0 0 0
Exports 0 0 0 0
Demand 188 194 201 209
Demand Growth (%) 0.6% 3.3% 3.5% 4.1%
EO capacity increased from 253 KT in 2014-15 and further is expected to touch

268 KT in the next fiscal. Debottlenecking of EO capacity by RIL in 2012-13
happened and in 2014-15. RIL capacity was enhanced from 188 KT in 2015-16 to
203 KT in 2016-17. Demand for EO grew at 3.3% and is expected to be around
3.5-4% in next two fiscals.
Synthetic Rubber
SBR which accounts for 40% of the total synthetic rubber demand is consumed
mostly in the tyre sector. Considering the large amount of SBR that is being
consumed in the manufacture of tires and tire products, demand is very much
dependent on the automotive industry and tire sectors as a whole.
On a positive note, growing use of low-rolling-resistance tires to reduce fuel

consumption and decrease CO2 emissions should increase SBR demand.
In 2015-16, synthetic rubber demand grew at 5% and is expected to maintain the
same growth rate in 2016-17.
Styrene butadiene rubber (SBR) prices in India witnessed a fall in March 2017,
dragged down by continued slump in the feedstock butadiene (BD) market, amid
abundant stocks and tepid demand. Downstream tyre makers in the country
retreated to the sidelines, holding back their purchases for the month, which marks
the end of India's fiscal year.
50
Table 19: Demand Supply Balance of PBR, SBR, NBR & EPDM
PBR 2014-15 A 2015-16 A 2016-17 E 2017-18 E

Capacity 114 124 124 124
Production 104 112 116 120
Imports 70 62 70 83
Exports 3 6 6 5
Demand 171 172 183 198
Demand Growth (%) 0.7% 0.1% 6.6% 8.2%
SBR 2014-15 A 2015-16 A 2016-17 E 2017-18 E
Capacity 140 290 290 290
Imports 230 191 133 121
Exports 10 28 33 29
Demand 290 306 313 322
Demand Growth (%) 7.4% 5.5% 2.3% 2.9%
NBR 2014-15 A 2015-16 A 2016-17 E 2017-18 E
Imports 27 32 34 38
Exports 0 0 4 4
Demand 45 50 52 56
Demand Growth (%) 18.4% 11.1% 4.0% 7.7%
EPDM 2014-15 A 2015-16 A 2016-17 E 2017-18 E
Production 0 0 0 0
Imports 33 42 46 49
Exports 0 0 0 0
Demand 33 42 46 49
Demand Growth (%) -5.7% 27.3% 9.5% 6.5%
Spot offers for SBR non-oil grade 1502 at $2,800-2,900/tonne CFR (cost and
freight) India were met with little interest. On 1 March, SBR prices were assessed
stable for the second consecutive week at an average of $2,800/tonne CFR India,
following a 62% surge from late November 2016, as per ICIS data.
Falling prices of rival product natural rubber (NR) further exerted downward
pressure on SBR prices, market sources said. NR prices have been fluctuating in
the $2,000-2,300/tonne range, much lower than the current SBR prices,
encouraging tyre makers to adjust their formulations to include more NR. India’s
SBR demand typically weakens in March as tyre manufacturers are unwilling to
51
build up their stocks before the new fiscal year starts. Availability of cheaper deep-
sea material from Europe and Russia has also been weighing down on demand
for Asia-origin SBR.
As shown in table, SBR demand registered a growth of 5.5% in 2015-16 and

expected to be subdued around 3% in following two years. Imports are expected
to significantly reduce by 2016-17 onwards with RIL new capacity coming up to full
steam. India is expected to jump three places to become the world's No.3 car
market by 2018. This has fuelled a domestic rush to produce more of the synthetic
rubber that is mixed with natural rubber to make tyres.
EPDM demand rebounded and witnessed a robust growth of 27.3%in 2015-16 and
is expected to grow at 10% in 2016-17 before a slowdown in 2017-18. Reliance is
the only producer of PBR in India. PBR demand growth rate is expected to improve
to ~7% by 2016-17 from a low of ~0.1% in 2015-16 and furthermore to 8.2% in
2017-18.
Carbon Black Feedstock & Carbon Black
Carbon black is an additive for rubber products which also finds application as a
key raw material in various chemical industries including inks, coatings, paints,
batteries, electrical cables, plastic films, pipes and sealants etc. More than 60% of
the demand for carbon black comes from tyres segment. According to ATMA
(Automotive Tyre Manufacturers' Association), carbon black constitutes 11% of the
raw material cost of tyre companies and forms 20-25% of volumes of the tyre.
The rubber industry uses a total of 95% of carbon black production while the rest
is consumed by plastics, paints and dry cells. In domestic market, the company is
regular supplier to all the major tyre manufacturers and has an overall domestic
share of around 40%. PCBL continues to be the undisputed leader in the field of
carbon black in India.
India’s carbon black market is expected to grow at around 14% CAGR until 2020.
Superior reinforcing properties make carbon black a suitable material for use in
diverse applications ranging from tyres, plastics, electronic equipment to inks, dyes
and coatings. The expansion of tyre and rubber industries in the southern region
of India is boosting the demand for carbon black in the country.
The shift in manufacturing base of automobiles and tyre industries is expected to

be a major driver for the carbon black market over the coming years. Additionally,
the use of carbon black has increased in specialty segments such as inks,
conductive plastics and high-performance coatings, which has led to diversification
in product range offered by key industry players.
52
In the past, Indian carbon black industry faced stiff competition from cheaper
imports coming from China, which adversely affected the sales and profit margins
of domestic players. However, various duties and taxes imposed by the Indian
government on these imports have provided a respite to domestic industry players
in the country.
Carbon black market in India is set to show promising growth in the next five years
on account of various favorable developments in the country. Major players such
as Phillips Carbon Black Limited have started incorporating backward integration
to counter the fluctuation in prices of feedstock and volatility in crude oil prices.
Moreover, low cost production in the APAC region has helped Indian players to
consolidate their position in the carbon black market
Demand for carbon black in paints and coatings, and inks is expected to show an
increase over the next five years. Demand for non-rubber applications that mainly
use specialty blacks will display significant increase. Plastic and printing inks are
likely to account for significant share of specialty black demand. Another emerging
application area for specialty carbon black is metallurgy. Moreover, as special
blacks commands higher price than the widely used furnace blacks, they offer
higher margins to suppliers. Furthermore, the demand for special blacks is not
influenced by the cyclicality in the rubber and motor vehicle industries.
Indian Automobile Industry’s domestic market recorded an increase in passenger

vehicle sales by 7%, commercial vehicle by 11% and muted growth of 1 - 3% in
two and three wheeler segments in FY16. Low cost of ownership, improving
demand from infrastructural activity and better than a normal monsoon should
drive the FY17 growth across the segments. Auto exports grew by 1.9% on
account of lower sales in two wheeler segment.
Tyre Industry recorded lower production amid exports falling by 13-15% and
increased imports by 12-14% in FY16. FY17 growth across segments is expected
to improve with improving rural demand and increased infrastructural activity.
Driven by rising demand from tyre industry, in addition to construction and

manufacturing sectors which use carbon black to provide strength to industrial
rubber compounds and other equipment.
Increasing demand for specialty carbon black has prompted leading carbon black
manufacturers to either increase their production capacity in the segment or
convert the production line for standard carbon black to specialty carbon black
Demand growth was good in 2015-16 in case of carbon black growing at ~10%
compared to previous year’s negative growth.
53
Total import of carbon black in India during 2015-16 was 100 KT and import from
China and South Korea accounted for 90% of total import. Imports are expected
to further increase to 150 KT by 2017-18.
Table 20: Demand Supply Balance of CBFS & Carbon Black
2014-15 A 2015-16 A 2016-17 E 2017-18 E

CBFS (KT)
Capacity 1925 1925 1925 1925
Production 1430 1520 1650 1750
Imports 1300 1300 1560 1650
Exports 720 750 750 240
Demand 1430 1520 1650 1750
Demand Growth (%) -1.4% 6.3% 8.6% 6.1%
Carbon Black (KT)
Capacity 1040 1040 1040 1040
Production 780 832 884 936
Imports 70 100 125 150
Exports 90 200 250 300
Demand 850 932 1009 1086
Demand Growth (%) -3.4% 9.6% 8.3% 7.6%
Meanwhile, CBFS too registered a healthy growth of 6.3% in 2015-16 and is

expected to further improve to around 9% in 2016-17 and then slow down to 6%
by 2017-18.
Other Key Petrochemicals
Overall other key petrochemicals demand in 2015-16 witnessed a growth of 8%

and is expected to witness a growth of 2-3% in next fiscal years.
Table 21: Demand Supply Balance of Benzene, Toluene, MXS & OX
(KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E

Benzene
Capacity 1315 1560 1710 2415
Production 1041 1135 1256 1872
Imports 0 0 0 0
Exports 566 645 761 1362
Demand 475 490 495 510
Demand Growth (%) -16.2% 3.2% 1.0% 3.0%
54
(KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E

Toluene
Capacity 270 270 270 270
Production 140 140 140 140
Imports 300 380 390 400
Exports 0 0 0 0
Demand 440 520 530 540
Demand Growth (%) 8.9% 18.2% 1.9% 1.9%
MXS
Imports 79 79 120 138
Exports 18 0 0 0
Demand 140 157 187 208
Demand Growth (%) 40.0% 12.1% 19.1% 11.2%
OX
Capacity 420 420 420 420
Production 462 500 450 450
Imports 36 30 10 10
Exports 213 227 165 165
Demand 287 280 289 289
Demand Growth (%) 3.2% -2.4% 3.2% 0.0%
Benzene demand witnessed a positive growth after negative growth in previous

year at 3.2% in 2015-16 and is expected to grow at the same rate over next two
years. Exports too are expected to further increase by 2017-18 and touch 1362 KT
with capacity additions by RIL and OPAL. Toluene demand registered a robust
growth of ~18.2% in 2015-16 and expected to witness a subdued demand growth
of 2% in next two fiscals. MXS witnessed a growth in demand at 12% in 2015-16
and is expected to register even better growth in next fiscal. Imports in case of
MXS are expected to rise to 138 KT by 2017-18 from 79 KT in 2015-16. Meanwhile,
OX registered a negative growth rate of 2.4% in 2015-16. There is no new capacity
addition lined up for OX, however, demand is expected to increase to 289 KT by
2016-17.
Outlook for the Overall Indian Petrochemical Industry
India’s aggregated demand for petrochemicals increased by 13% in 2015-6.

Combining the demand for all the key segments in the petrochemical industry
aggregate demand for the entire petrochemical sector in India is likely to increase
from 35.8 MMT in 2015-16 to 38.7 MMT in 2016-17 and further to 41.4 MMT in
55
2017-18 as depicted in figure below. At the aggregate level, therefore, demand for
petrochemicals in India is expected to grow at Y-0-Y at 8% in 2016-17 and at 7%
in 2017-18.
Figure 14: Aggregate Petrochemical Demand (All key segments – MMT)
45 14%
Demand (MMT) Demand Growth (%) 9%
40 8% 41 12%
13%
35 5% 38
36 10%
30
32
25 8%
MMT
20 6%
15
4%
10
2%
5
0 0%
2014-15 2015-16 2016-17E 2017-18E
Polymers are likely to register growth rate of ~8% and 9% in 2016-17 and 2017-
18 respectively. Polyolefins are expected to grow at 7% and 8% in 2016-17 and
2017-18 with the startup of new capacities. Surfactants are projected to grow at
~6% and 5% in the same period. Synthetic rubbers are expected to register
demand growth in the range of 4% and 5% in 2016-17 and 2017-18 respectively.
Other key petrochemicals expected to grow at ~11% in 2015-16. India’s demand

from the automobiles, packaging, and agriculture and infrastructure sector is
expected to grow at healthy rate with easing of government’s monetary policy.
Polymer demand drivers are in place hence plastic industry is poised for
exponential growth in coming years and healthy growth rate in end-use sectors.
This optimism is based on the expectation that India's GDP would again grow at
7.5% plus in 2016-17.
56
Section 3
Statistical Appendix
57
Monomers (KT)
2014-15 A 2015-16 A 2016-17 E 2017-18 E
Ethylene
Capacity 3515 3907 4842 7212
Production 3450 3870 4780 7200
Imports 60 25 50 0
Exports 0 6 0 10
Propylene
Capacity 4230 4601 4773 4842

Production 4020 4590 4770 4840
Imports 0 0 0 0
Exports 10 10 15 0
Butadiene
Capacity 435 435 550 550
Production 229 318 416 550
Imports 0 6 6 6
Exports 46 79 96 164
Demand Growth% 43% 40% 27% 26%
Styrene
Imports 617 697 750 795
Exports 0 0 0 0
Net Trade 617 697 750 795
Demand Growth% 7.9% 13.0% 7.6% 6.0%
Polymers (KT)
2014-15 A 2015-16 A 2016-17 E 2017-18 E
LDPE
Capacity 205 205 205 655
Production 184 198 202 579
Imports 328 468 501 444
Exports 0 0 0 164
Demand Growth% 16.0% 29.9% 5.0% 22.2%
EVA
Capacity 15 15 0 0
Production 8 5 0 0
58
Imports 135 147 158 166

Exports 0 0 0 0
Demand Growth% 8.9% 6.3% 4.3% 5.1%
LLDPE
Capacity 980 980 1640 2190
Production 744 942 1155 2050
Imports 599 614 637 466
Exports 8 17 59 696
Demand Growth% 7.4% 16.2% 9.9% 7.4%
HDPE
HDPE Capacity 1830 1830 2810 2810
LLDPE Capacity 980 980 1640 2190
Total Capacity 2810 2810 4450 5000
Production 1269 1548 1745 2261
Imports 572 568 634 466
Exports 27 93 143 389
Demand Growth% 3.5% 11.5% 9.9% 4.4%
All PE
Capacity 3015 3015 4655 5655
Production 2197 2688 3102 4890
Imports 1499 1650 1772 1376
Exports 35 110 203 1249
Demand Growth% 6.5% 15.7% 9.1% 8.2%
PP
Capacity 4130 4520 5120 5120
Production 4176 4885 5007 5460
Imports 511 559 617 580
Exports 720 701 560 695
Demand Growth% 7.9% 19.5% 4.8% 8.4%
Polyolefins
Capacity 7160 7550 9775 10775
Production 6381 7578 8109 10350
Imports 2145 2356 2547 2122
Exports 755 811 763 1944
59

Demand Growth% 7% 17% 7% 8%
PVC
Capacity 1390 1470 1482 1482
Production 1256 1362 1388 1423
Imports 1172 1335 1608 1865
Exports 0 0 0 0
Demand Growth% 5.8% 10.5% 10.7% 10.0%
PS
Capacity 472 476 490 490
Production 270 308 325 340
Imports 13 20 20 20
Exports 42 71 70 70
Demand Growth% 9.8% 9.7% 5.4% 5.5%
Polymers
Capacity 9022 9496 11747 12747
Production 7907 9248 9822 12113
OR (%) 88% 97% 84% 95%
Imports 3330 3711 4175 4007
Exports 797 882 833 2014
Net Trade -2533 -2829 -3342 -1993
Apparent Demand 10004 11553 12453 13525
Demand Growth% 6.9% 15% 8% 9%
Intermediates (KT)
2014-15 A 2015-16 A 2016-17 E 2017-18 E
EDC
Capacity 205 205 205 205
Production 172 191 191 187
Imports 518 595 600 610
Exports 0 0 0 0
Demand Growth% 13.7% 13.9% 0.6% 0.8%
60
VCM
Capacity 906 981 981 981
Production 865 939 928 964
Imports 375 448 485 484
Exports 0 0 0 0
Demand Growth% -2.8% 8.3% 1.9% 2.5%
Polyolefins (KT)
(KT) Actual Projected % Change year on year
2014-15 2015-16 2016-17 2017-18 2015-16 2016-17 2017-18
LDPE+EVA 658 821 861 1025 25% 5% 19%
LLDPE 1328 1542 1695 1820 16% 10% 7%
HDPE 1828 2038 2239 2338 11% 10% 4%
PP 3509 4192 4395 4765 19% 5% 8%
Total PO 7323 8593 9190 9948 17% 7% 8%
Source: Industry Estimates. A: Actual, E: Estimate
Vinyls (KT)
2014-15 A 2015-16 A 2016-17 E 2017-18 E
PVC
Capacity 1390 1470 1482 1482
Production 1256 1362 1388 1423
Imports 1172 1335 1608 1865
Exports 0 0 0 0
Demand Growth% 5.8% 10.5% 10.7% 10.0%
Styrenics (KT)
2014-15 A 2015-16 A 2016-17 E 2017-18 E
PS
Capacity 472 476 490 490
Production 270 308 325 340
Imports 13 20 20 20
Exports 42 71 70 70
Demand Growth% 9.8% 9.7% 5.4% 5.5%
61
ABS 2014-15 A 2015-16 A 2016-17 E 2017-18 E

Capacity 155 190 190 190
Production 102 112 120 130
Imports 64 71 80 90
Exports 0 0 0 0
Demand Growth% 9.9% 10.0% 9.6% 10.0%
SAN 2014-15 A 2015-16 A 2016-17 E 2017-18 E
Capacity 130 150 170 170
Imports 7 8 8 9
Exports 0 0 0 0
Demand Growth% 5.6% 8.0% 23.4% 7.7%
PET (KT)
PET 2014-15 A 2015-16 A 2016-17 E 2017-18 E
Capacity 1140 1765 1815 1915
Production 880 1280 1400 1625
Imports 150 86 80 50
Exports 330 595 660 540
Demand 700 770 900 1035
Demand Growth (%) 6.1% 10.0% 16.9% 15.0%
Aromatics - PX (KT)
2014-15 A 2015-16 A 2016-17 E 2017-18 E
PX
Capacity 3009 3392 3662 5643
Production 2813 3338 3296 5040
Imports 699 799 1179 800
Exports 1066 837 839 1836
Demand Growth% 6.3% 31.8% 22.5% 0.0%
62
Surfactants (KT)
2014-15 A 2015-16 A 2016-17 E 2017-18 E
LAB
Capacity 530 550 570 570
Production 415 377 438 454
Imports 124 189 167 177
Exports 24 6 6 6
Demand Growth% 4.3% 5.3% 7.0% 4.9%
EO
Capacity 253 268 268 268
Production 188 194 201 209
Imports 0 0 0 0
Exports 0 0 0 0
Demand Growth% 0.6% 3.3% 3.5% 4.1%
Fibre Intermediates (KT)

2014-15 A 2015-16 A 2016-17 E 2017-18 E
ACN
Capacity 40 0 0 0
Production 34 0 0 0
Imports 118 160 170 180
Exports 0 0 0 0
Demand Growth% 3.4% 5.3% 6.3% 5.9%
Caprolactam
Imports 13 45 58 60
Exports 0 0 1 0
Demand Growth% 5.4% 29.7% 9.9% 2.1%
PTA
Capacity 3930 5652 6226 7476
Production 3596 4619 5368 6582
Imports 1045 697 361 60
Exports 0 172 268 775
63

Demand Growth% 5.5% 10.8% 6.2% 7.4%
MEG
Capacity 1200 1200 1200 2160
Production 960 1102 1110 1819
Imports 982 1039 1167 780
Exports 68.6 72 75 239
Demand Growth% 1.8% 14.3% 6.4% 14.1%
Synthetic Fibres (KT)

2014-15 A 2015-16 A 2016-17 E 2017-18 E
PSF
Capacity 1260 1260 1260 1404
Production 953 974 979 1123
Imports 46 59 59 30
Exports 183 160 180 220
Demand 862 932 917 963
Demand Growth (%) 3.2% 8.1% -1.6% 5.0%
ASF
Imports 34 34 34 34
Exports 20 20 20 20
Demand 101 101 101 101
Demand Growth (%) -11.3% 0.0% 0.3% 0.0%
PPSF
Production 4 4 4 4
Imports 1 1 1 1
Exports 11 11 11 11
Demand 5 5 5 5
Demand Growth (%) 10.0% 0.0% 0.0% 0.0%
PFY
Capacity 4623 4731 4666 4746
Production 2766 2747 2905 3062
Imports 25 21 27 15
Exports 168 118 126 115
Demand 2608 2665 2751 2926
64
2014-15 A 2015-16 A 2016-17 E 2017-18 E

Demand Growth (%) 3.3% 2.2% 3.2% 6.4%
PPFY
Imports 1 2 2 2
Exports 2 2 2 2
Demand 11 14 14 14
Demand Growth (%) -0.3% 22.0% 0.0% 0.0%
VSF
Capacity 490 490 490 490
Production 364 364 364 364
Imports 27 34 36 36
Exports 130 154 144 144
Demand 268 305 339 370
Demand Growth (%) -3.5% 13.5% 11.1% 9.3%
VFY
Imports 16 10 10 10
Exports 6 0 0 0
Demand 54 55 60 65
Demand Growth (%) 2.2% 1.1% 9.1% 8.3%
NFY
Imports 2 2 2 2
Exports 2 2 2 2
Demand 52 52 52 52
Demand Growth (%) 15.6% 0.0% 0.0% 0.0%
65
Elastomers (KT)
PBR 2014-15 A 2015-16 A 2016-17 E 2017-18 E

Capacity 85 114 124 124
Imports 86 70 64 73
Exports 1 2 6 10
Demand Growth% 1.6% 0.5% 0.6% 8.1%
SBR
Capacity 40 140 290 290
Imports 245 230 191 130
Exports 15 10 28 30
Demand Growth% 17.4% 7.4% 5.5% 5.6%
NBR
Imports 18 27 32 38
Exports 0 0 0 4
Demand Growth% 8.6% 18.4% 11.1% 12.0%
EPDM
Production 0 0 0 0
Imports 35 33 40 45
Exports 0 0 0 0
Demand Growth% 8.0% -5.7% 21.2% 12.5%
66
Carbon Black & CBFS (KT)
CBFS 2014-15 A 2015-16 A 2016-17 E 2017-18 E

Capacity 1925 1925 1925 1925
Production 1450 1430 1520 1610
Imports 800 1300 1300 1450
Exports 800 720 750 750
Demand 1450 1430 1520 1610
Demand Growth (%) -6.1% -1.4% 6.3% 5.9%
Carbon Black
Capacity 1040 1040 1040 1040
Production 780 780 832 884
Imports 100 70 100 125
Exports 120 90 200 250
Demand 880 850 932 1009
Demand Growth (%) 10.3% -3.4% 9.6% 8.3%
67
Other Key Petrochemicals (KT)
2014-15 A 2015-16 A 2016-17 E 2017-18 E

Benzene
Capacity 1260 1315 1492 1767
Production 1062 1075 1305 1550
Imports 0 0 0 0
Exports 495 571 775 1020
Demand Growth% -4.4% -11.1% 5.2% 0.0%
Toluene
Capacity 270 270 270 270
Production 140 140 140 140
Imports 264 300 380 390
Exports 0 0 0 0
Demand Growth% -9.6% 8.9% 18.2% 1.9%
MXS
Imports 34 79 79 75
Exports 18 18 0 0
Demand Growth% 20.5% 40.0% 12.1% 4.5%
OX
Capacity 420 420 420 420
Production 412 462 500 485
Imports 65 36 30 22
Exports 205 213 230 220
Demand Growth% -1.1% 3.2% 5.6% -5.3%
68

CPMA is the apex forum representing the Indian Petrochemical Industry,
Established in 1993, and the Association offers its members a podium to
collectively present their ideas, voice their concerns and offer suggestions on
relevant issues. It provides a linkage between the industry, the Government and
society. It interacts with policy makers and industry associations to develop and
maintain harmonious and conducive business conditions.
The Association, registered under the Indian Societies Act, is widely recognized
as one of the national apex bodies of the Indian Petrochemical Industry by all
Ministries and Departments of Government of India, apex Chambers of
Commerce and Industry and other related Associations in India and abroad.
CPMA is affiliated to the Confederation of Indian Industry (CII). The Association
is also a Steering Committee Member of the Asia Petrochemical Industry
Conference (APIC) and had successfully hosted the annual APIC 2010
conference on May 13-14, 2010 in Mumbai.
CPMA comprises various sub-committees constituted to effectively focus on key

areas within petrochemicals like Polyolefins, Vinyls, Styrenics, Glycols,
Elastomers, Fibre Intermediates and Surfactants. CPMA has also taken the lead
to set up and promote the India Centre for Plastics in the Environment (ICPE) to
deal with all environmental issues connected with the usage of plastics.
CPMA Members
1. Chemplast Sanmar Ltd. 10. Indian Oil Corporation Ltd.

2. DCM Shriram Ltd. 11. INEOS Styrolution India Ltd.
3. DCW Ltd. 12. LG Polymers (India) Pvt. Ltd.
4. Finolex Industries Ltd. 13. MCPI Materials Chemicals and
Performance Intermediates Pvt. Ltd.
5. Engineers India Ltd. 14. MRPL
6. GAIL India Ltd. 15. Reliance Industries Ltd.
7. Gujarat State Fertilizers & Chemicals Ltd.16. ONGC Petro Additions Ltd.
8. Haldia Petrochemicals Ltd. 17. Supreme Petrochem Ltd.
9. HPCL – Mittal Energy Ltd. 18. Tamilnadu Petroproducts Ltd.
19. Indian Synthetic Rubber Ltd.
Associate Members: - Sabic India Pvt Ltd and Indorama Industries Ltd.
Address
708, 7th Floor, Kailash Building
26, Kasturba Gandhi Marg, New Delhi-110001, INDIA
Phone: 91-11- 43598337, Fax: 91-11-43598337
Email: cpmai@airtelmail.in
Website: www.cpmaindia.com
Contact: Mr. Mahinder Singh, Secretary General
69
Phone: 91-11-43598337, Fax: 91-11-43598337
Email: cpmai@airtelmail.in Website: www.cpmaindia.com
Review & Outlook : Indian Economy
2
India’s GDP growth rate for 2015-16 revised to
7.9% from 7.6%
The upward revision of the 2015-16 data

was mostly due to a significant increase in
growth estimates for the industrial and
services sectors
• The industrial sector is now estimated to have grown at 8.2% against the earlier
estimation of 7.4%, the services sector is estimated to have grown at 9.9%
against 8.9% earlier
Indian Petrochemical Industry - Review & Future Prospects - APIC 2017, CPMAI, India 3
Economic fundamentals remain strong
• Good Monsoons, strong Rabi sowing, better

harvests could improve rural economy
• Urban demand remained relatively stable -
visible in growth in passenger car sales and
domestic airline traffic growth
• That along with the govt. focus on pushing up
spending in infra and job creation to lead to
improved demand conditions across economy
• Medium to long term outlook for India
continues to be robust
Indian economy grew faster than market expectation in
Q3FY17 with GDP growing at 7% Y-o-Y
Quarterly Estimates of GDP Growth
(GVA basis in percent)
7.8 8.3 7.9
6.9 7.2 7.4 7.0
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17

Source: CSO
• Q3 GVA was driven by improvement in
• Agriculture, forestry and fishing-up 6.0% Y-0-Y vs negative 2.2% Y-0-Y in Q3FY16
• Electricity, gas and water supply and other utility services – up 6.8% Y-0-Y
• Public administration, defence and Other Services - up 11.9% Y-0-Y
IIP rose to 2.7% in Jan’17, with mining, electricity and
manufacturing registering positive growth
Source: CSO
• The resumption of growth in consumer durables output signals normalization of

production schedules
• Capital goods output surged 10.7%
• While mining sector grew by 5.3% in January, electricity production increased
by 3.9% and manufacturing output rose by 2.3%
Source: CSO
Indian Petrochemical Industry - Review & Future Prospects APIC 2017, CPMAI, India 6
India’s trade deficit at a five-month low in Feb’17
• Exports rose for the seventh consecutive month

• India’s exports grew at its fastest pace in multiple years by 17.5%
in February while imports were up 21.8%
• During the same month, China’s exports dropped 1.3% and imports
soared 38.1%.
Wedge between WPI and CPI based inflation has
been widening
Source: CSO
• The surge in wholesale prices will not allow retail inflation to fall below a certain
limit, but the positive base effect from last year may keep it at “benign” levels
Indian Markets rallied to near recent high, despite correction post
demonetization… led by strong DII flows and return of FPI flows
• Sensex is expected to scale new highs in the year 2017-18.
The rupee stormed to a new 17-month high - a
level not seen since October 2015
Source: Bloomberg
• INR has appreciated to a 17-month high of Rs. 65.3/US$, intra-day on March 21st
2017, making it one of the best performing currencies in Asia excluding Japan rallied
4.8% since Dec. 31
• Rupee set for best first quarter since 1975, all thanks to foreign flows
• Strong capital inflows to equity and debt markets also provided support
Forex reserves surge $2.67 bn to reach $366.7 bn
• India’s foreign exchange reserves surged by whopping $2.671 billion to

$366.781 billion for the week ended March 2017 on account of increase
in foreign currency assets
FDI inflows into India jump 18% to a record
$46.4 bn in 2016 despite global fall
Source: RBI
• With this surge in FDI, India may beat its peers in terms of attracting foreign
funds
• It has grown at an annual average of 28.2% for the past three years
FII investments into India hit a record $6.45 bn in
March
Source: RBI
• Net investments made by FIIs in stocks in March alone is higher than

those made in the entire of 2016
• FIIs have pumped a massive $3.6 billion into stock markets on a net
basis so far in March, the highest in a month since February 2013
CAD at 0.6% of GDP in Q2’17
• CAD at $3.4 billion was lower than the $8.5 billion in the same period a year ago
• The contraction in CAD has been due to a sharp fall in imports relative to exports
during the quarter as oil and commodities prices
• Balance of payments was at a surplus of $8.5 billion compared with a deficit of
$900 million a year ago
On the expenditure side, the government
consumption rose sharply
• Private consumption growth
was positive surprise amid the
challenging environment
• Private Final Consumption

Expenditure – up 10.1% Y-0-Y
vs 6.8% Y-0-Y
• Government Final Consumption

Expenditure – up 19.9% Y-0-Y
vs 3.7% Y-0-Y
• Gross Fixed Capital Formation –

up 3.5% Y-0-Y vs 3.2% Y-0-Y
India’s GDP growth projections
Agencies 2017-18
CSO 7.4%
ADB 7.4%
Fitch Ratings 7.7%*

International agencies continue to
RBI 7.4%
remain positive on India with an
Moody’s 7.1%* expected growth for 2017 pegged
at and around 7.5%
Morgan Stanley 7.7%*
IMF 7.2%*
OECD 7.3%*
UN 7.7%*
World Bank 7.6%*

*figures represent calendar year 2017
Review & Outlook : Petrochemical Industry
17
Capacity for polymers to go up significantly by ‘18
PS PVC PP All PEs Total
12.7
14 11.7 0.5
0.5
12
9.0 9.5 1.5
1.5
10 0.5 0.5
MMT 8 1.4 1.5 5.1
5.1
6
4.2 4.5
4
5.7
2 4.7
3.0 3.0
0
2014-15 2015-16 2016-17 E 2017-18 E
In case of PP, capacity addition of 330 KT is expected by MRPL and 60
KT by RIL in 2015-16 and going forward in 2016-17 340 kT by OPAL,
110 by MRPL, 60 KT by BPCL-Assam and 90KT by RIL
Polymer demand grew at 15.5% in 2015-16
PS PVC PP All PEs Total
12.5
14 11.2
9.2 9.9 0.2
12 0.2
0.2 2.9
10 0.2 2.7
MMT
8 2.4
2.3
4.7
6 4.1
3.3 3.5
4
2 4.2 4.6
3.4 3.7
0
2013-14 A 2014-15 A 2015-16 E 2016-17 E
Demand for PE & PP is expected to witness a 9% and 8% average

growth in next two years
Net Trade: Polymers
Trend in Polymers net trade (MMT)
All PE PP PVC PS
0.21 0.14 0.12

0.03 0.05 0.05 0.05
-0.06 -0.13
-1.17
-1.34
-1.46 -1.54 -1.57 -1.61
-1.87
2014-15 2015-16 2016-17 E 2017-18
Petrochemical demand continuously growing
Aggregate petrochemicals demand combining all the key sector (mmt)
45
41
40 38
36
35
32
30
25
20
15
10
0
2014-15 2015-16 2016-17E 2017-18E
….and is expected to touch 41 mmt by 2017-18
Phone: 91-11-43598337, Fax: 91-11-43598337
Email: cpmai@airtelmail.in Website: www.cpmaindia.com 1
Review : Elastomers
Elastomers - Review & Future Prospects - APIC 2017, CPMA, India 2

Elastomers demand expected to grow around 5% in next
two years
625
594
600 kT 570
539
513
500 474
411
400
348
300
200
100
0
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
A A A A A A E E

PBR demand increased by 0.1%; SBR by 6% in 2016
PBR SBR
225 350
kT kT 313
322
198 306
200
183 300 290
171 172
175
250
150
125 200
100 150
75
100
50
50
25
0 0
2014-15 E 2015-16 A 2016-17 E 2017-18 E 2014-15 A 2015-16 A 2016-17 E 2017-18 E
Demand for PBR to witness healthy growth in next two years around
8% while SBR is expected to grow at ~3% in the same period
Elastomers imports stood at 327 kT in 2015-16
PBR SBR NBR EPDM
kT
-16
-25-23 -30-32 -23-32 -32-36 -39
-36
-48
-57 -59
-74
-150
2014-15 A 2015-16 A 2016-17 E 2017-18 E
SBR deficit stood at 16 kT in 2015-16; expected to be around 23 KT

in 2016-17 and 32 KT in 2017-18

Outlook : Elastomers

Outlook for 2016-17 and 2017-18 is positive
30% Figs in %
27.3%
25% PBR SBR NBR EPDM

18.4%
20%
15%
11.1%
9.5%
10% 7.4% 8.2% 7.7%6.5%
5.5% 6.6%
4.0%
5% 2.3% 2.9%
0.7% 0.1%
0%
-5%
-5.7%
-10%
2014-15 A 2015-16 A 2016-17 E 2017-18 E
Elastomers to register growth rate around 5% in next two fiscal years

Elastomers import dependency in 2016-17
Figs in %
41%
2014-15 A 79%
60%
100%
PBR
36%
2015-16 A 62%
64% SBR
100%
38% NBR
2016-17 E 42%
65%
100% EPDM
42%
2017-18 E 38%
68%
100%
SBR to witness low import dependency in next two years; While

PBR and NBR to see a rise in the same period

Phone: 91-11-43598337, Fax: 91-11-43598337
Review : Fibre Intermediate Sector
2
Fibre Intermediate witnessed 12% growth in
2015-16
8000 KT
7576
7000
6767
6481
5958
6000
5000
2012-13 2013-14 2014-15 2015-16
and is expected to grow at ~8% in next two years
Fibre Intermediate - Review & Future Prospects – APIC 2017, CPMA, India. 3
Caprolactam demand grew at a staggering 30%
in 2015-16
175 140
KT Acrylonitrile KT Caprolactam
131
160 130
152
150 147 120
110
101
125 100
96
90
100 80
2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
Acrylonitrile demand grew by 5.3% in 2015-16
PTA demand grew at a robust 10.8% in 2015-16
6000 2400
KT PTA KT MEG
5144 2141
5000 2100
4641
4398
1873
1840
4000 1800
3000 1500
2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
While MEG grew at 14.3% in the same period
Fibre intermediate Demand supply : 2015-16
Figs in %
MEG PTA MEG

PTA 68%
19% 28%
80%
ACN
0%
Caprolactum ACN
1% 2%
Caprolactum 2%
Fibre Intermediate Production Fibre intermediate Demand

5807 KT 8052 KT
Fibre intermediate production was dominated by PTA & MEG,

99% share in total production in 2015-16
Fibre Intermediate Total Capacity @6922 KT:
2015-16
Acrylonitrile Caprolactum PTA MEG
5652
KT
3930 3930
1200 1200 1200
40 70 40 70 0 70
2013-14 2014-15 2015-16
PTA capacity addition to take place over next two fiscal years
Outlook : Fibre Intermediate Sector
8
Fibre Intermediate witnessed a 8% growth over
next two years
KT 8793
8052
7576
6767
6481
2013-14 2014-15 2015-16 2016-17E 2017-18E
MEG expected to witness fastest growth in next two years
Demand Outlook for next two years
Figures in %
29.7%
14.3% 14.1%
10.8% 9.9%
7.4%
5.4% 5.5% 6.3% 6.2% 6.4% 5.9%
5.3%
3.4%
1.8% 2.1%
2014-15 2015-16 2016-17 E 2017-18 E
Fibre intermediate demand to grow in the range of

8% over next two years
ACN and Caprolactam expected to grow by 6% in
next two years
200 150 Caprolactam 147
KT Acrylonitrile KT
144
180 140
175 170 131

130
160
152
150 120
110
125
101
100
100 90
2014-15 2015-16 2016-17 E 2017-18 E 2014-15 2015-16 2016-17 E 2017-18 E
Acrylonitrile demand met by imports now as production stopped
Demand for PTA to grow at ~7% and MEG ~10%
over two years
6000 5867 2700
KT PTA KT MEG 2599
5461
5144 2400
2277
5000
4641 2141
2100
4000
1873
1800
3000 1500
2014-15 2015-16 2016-17 E 2017-18 E 2014-15 2015-16 2016-17 E 2017-18 E
In 2016-17 PTA expected to witness growth at

6.2% and MEG at 6.4%
Fibre Intermediate Capacity Addition in next two
fiscals
12000
KT
10000 9706
8000 7496
6922
6000 5240
4000
2000
0
2014-15 2015-16 2016-17 E 2017-18 E
PTA Capacity addition by RIL in 2015-16 completed
Fibre Intermediate Total Capacity expected to
touch 9706 KT by 2017-18
Acrylonitrile Caprolactum PTA MEG 7476
6226
KT
5652
3930
2160
1200 1200 1200
40 70 0 70 0 70 0 70
2014-15 2015-16 2016-17 E 2017-18 E
RIL had two lines of PTA capacity at Dahej plant in 2015-16 and
further 1250 KT capacity would be added by JBF in 2017-18
Fibre Intermediates trade deficit at 66 KT by
2017-18
715
KT
-13 -45 -57 -60

-118 -93
-160 -170 -180
-525 -541
-913 -967
-1045 -1092
2014-15 2015-16 2016-17 E 2017-18 E
Trade Deficit expected to reduce significantly by 2016-17 to 1412

KT and further to 66 KT by 2017-18 with PTA exports rising
Import dependency to reduce significantly for PTA
by 2017-18
100% 100% 100%
78%
%
52% 51%
49%
40%
41%
34% 30%
23%
13% 14%
7%
1%
2014-15 2015-16 2016-17 E 2017-18 E
Exportable surplus for PTA from 2017-18 onwards
Phone: 91-11-43598337, Fax: 91-11-43598337
Email: cpmai@airtelmail.in Website: www.cpmaindia.com 1
Review : Polyolefins Sector
Indian Polyolefins Industry - Review & Future Prospects - APIC 2017, CPMA, India 2
Polyolefins demand grew at a staggering 17% in
2015-16
MMT
9.95
9.19
8.59
7.32
6.83
2013-14 2014-15 2015-16 2016-17 E 2017-18 E
Expected to register a healthy growth of 7%

and 8% in 2016-17 and 2017-18 respectively
Demand of Polyolefins in 2015-16
LLDPE+HDPE+LDPE Polypropylene
5.02
MMT
4.64 MMT 4.77
4.40
4.25 4.19
3.67
3.45 3.51
3.25
2013-14 2014-15 2015-16 2016-17E 2017-18E 2013-14 2014-15 2015-16 2016-17 E2017-18 E
PE & PP demand grew at robust growth of 16% and 20% respectively in

2015-16; expected to grow at 9% and 7% respectively in next two years
Polyolefin production increased 18% in 2015-16
LDPE
LDPE+ +EVA
EVA 8%
3% PP
49%
PP
64% LLD/HD
33% LLD/HD
42%
Polyolefin Production – 7.5 MMT Polyolefin Demand – 8.5 MMT
Polyolefin consumption is dominated by Lin PE & PP demand
PE & PP Demand Trend
LDPE+EVA Lin PE PP
4.8
MMT 4.4
4.2 4.2
3.9
3.5 3.6
3.3 3.2
3.0
1.0
0.8 0.9
0.6 0.7
2013-14 2014-15 2015-16 2016-17 E 2017-18 E
Lin PE and PP demand growth expected to rise further in next two years
Polyolefins net trade deficit in 2015-16
LDPE+EVA LLD+HDPE PP
0.49
MMT
0.21 0.15 0.12
0.14
-0.06
-0.37
-0.46 -0.45
-0.61 -0.66
-0.75
-1.07 -1.07
-1.14
2013-14 2014-15 2015-16 2016-17E 2017-18E
LLD + HDPE registered net trade deficit of 1.07 MMT and PP registered trade
surplus of 0.14 MMT in 2015-16; LLD+HD would be in surplus in 2017-18
Outlook : Polyolefins Sector
Projected demand for Polyolefins in India
(KTA) Actual Projected % change Y-0-Y
2014-15 2015-16 2016-17 2017-18 2015-16 2016-17 2017-18
LDPE+EVA 658 821 861 1025 25% 5% 19%
LLDPE 1328 1542 1695 1820 16% 10% 7%
HDPE 1828 2038 2239 2338 11% 10% 4%
PP 3509 4192 4395 4765 19% 5% 8%
Polyolefins 7323 8593 9190 9948 17% 7% 8%
Robust demand growth is expected for polyolefins in next two years
PE import dependency to reduce by 2017-18
LDPE+EVA LLD+HDPE PP
2013-14 65% 28% 12%
2014-15 70% 37% 15%

Figs in %
2015-16 75% 33% 13%
2016-17 E 77% 32% 14%
2017-18 E 60% 22% 12%
Liner PE import dependency to reduce by 2017-18
Phone: 91-11-43598337, Fax: 91-11-43598337
Review : Styrenics Sector
Styrenics in India - Review & Future Prospects - APIC 2017, CPMA, India 2
Styrene Demand Trend
900
Styrene demand for derivative production (kT)
795
800 750
697
700
617
600 572
500
400
300
200
100
0
2013-14A 2014-15 A 2015-16 A 2016-17 E 2017-18 E
Styrene derivative demand to register around 7% in next two years
Styrene derivatives : Demand
Demand for Styrenics in India

CARG
(kT) 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2011-12-
2017-18
PS 248 250 217 238 261 275 290 3.2%
EPS 78 83 80 82 91 102 102 5.5%
ABS 120 137 151 166 183 200 220 12.9%
SBR 197 230 270 290 306 313 322 10.3%
SAN 81 83 89 94 102 125 135 10.7%
Source: CPMA, E- Estimated

Note: There might be other minor applications of Styrene which constitutes a small figure
ABS, SBR and SAN expected to grow over 10% CAGR in 2011-18 period
Outlook : Styrene Sector
Projected demand for Styrenics in next two years
Projected demand for Styrenics in India
(kT) Actual Projected % change year on year
2014-15 2015-16 2016-17 2017-18 2015-16 2016-17 2017-18
PS 238 261 275 290 9.7% 5.4% 5.5%
EPS 82 91 102 102 11.0% 12.1% 0.0%
ABS 166 183 200 220 10.0% 9.6% 10.0%
SBR 290 306 313 322 5.5% 2.3% 2.9%
SAN 94 102 125 135 8.0% 23.4% 7.7%
Source: CPMA
ABS, SBR and SAN to grow at ~10%, ~3% and ~8% in 2017-18 respectively
Phone: 91-11-43598337, Fax: 91-11-43598337
1
Review of Vinyl Sector
Vinyls in India -Review & Future Prospects - APIC 2017, CPMA, India 2
PVC witnessed a growth of 10.5% in 2015-16
PVC Apparent Demand

KT
2699
2443
2263 2309
1979
2011-12 2012-13 2013-14 2014-15 2015-16
Demand grew from 2443 KT in 2014-15 to 2699 KT in 2015-16
PVC Capacity addition in 2015-16
PVC Capacity
KT
1470
1390 1390
1335 1345
2011-12 2012-13 2013-14 2014-15 2015-16
2013-14 saw capacity addition by DCW in cPVC and by RIL by

debottlenecking; Capacity addition is expected by RIL in 2015-16
Net trade of EDC & VCM
EDC Net Trade VCM Net Trade
KT
-326
-375
-411 -416 -412
-440 -450 -448
-518
-595
2011-12 2012-13 2013-14 2014-15 2015-16
Imports dependency increased further in 2015-16 in case of EDC and

VCM; though VCM witnessed a marginal dip in 2014-15
PVC demand supply balance in India
Capacity Demand Import 2699
KT 2443
2263 2309
1979
1470
1335 1345 1390 1390 1335
1172
1048 1026
749
2011-12 2012-13 2013-14 2014-15 2015-16
PVC deficit has increased from 644 KT in 2011-12 to 1229 KT in 2015-16
Outlook for Vinyl Sector
PVC demand expected to register robust 10%
growth in next two years as well
PVC Apparent Demand
3287
2988
2699
KT 2443
2263 2309
1979
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17E 2017-18E
Demand to touch 3287 KT by 2017-18
PVC deficit to increase in future
Capacity Demand Import
3500 3287
KT 2988
3000
2699
2443
2500 2263 2309
1979
2000 1865
1608
1470 1482 1482
1500 1335 1345 1390 1390 1335
1172
1048 1026
1000
749
500
0
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17E 2017-18E
No new capacity coming on-stream to meet the rising domestic consumption;

capacity addition in 2016-17 expected by DCW in case of cPVC at ~12 KT
EDC & VCM Net Trade
EDC Net Trade VCM Net Trade
KT
-375
-412
-450 -448
-485 -484
-518
-595 -600 -610
2013-14A 2014-15A 2015-16E 2016-17E 2017-18E
Import dependency to increase!

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Indian Petrochemical Industry

Indian Petrochemical Industry

Review of 2016-17 & Outlook for 2017-18

Country Paper from India

SYNTHETIC FIBRES ......................................................................................... 48

The Indian Economy

The Indian Economy: Review of 2016-17 & Outlook for 2017-18

The Indian Economy Review of 2016-17

Post the demonetization announcement, the pace of remonetisation has picked

The broad macroeconomic indicators, based on latest data, are as follows:

The projects identified under Sagarmala Programme are expected to mobilize

Snapshot of Key Indicators

Figure 1: India’s GDP Growth (year-on-year in per cent)

Figure 2: Quarterly Estimate of GDP Growth (in per cent)

The higher-than-expected growth in the third quarter was driven primarily by

Figure 3 : Quarterly Growth in Sectors till Q3 FY17

Private final consumption expenditure rose 10% compared to a year ago.

Analysts polled by Reuters expected Q3 GDP growth to be 6.4%; those polled by

It appears like the negative impact of demonetisation was over-estimated. India

i. IIP – Index of Industrial Production

Figure 4: Index of Industrial Production (IIP)

On cumulative basis, IIP during April-January 2016-17 showed an expansion of

In terms of industries, nine of the 22 groups registered growth, led by electrical

ii. Core Industries Performance

iii. Balance of Payments

Private transfer receipts, mainly representing remittances by Indians employed

Non-resident Indian (NRI) deposits declined to US$ 2.1 billion in Q2 of 2016-17

Analysts expect the balance of payments to be in surplus in 2017/18 but with

This underscores India’s status as an island of economic stability, especially as

Invest India, the government’s official investment promotion and facilitation

Services sector continued to attract highest investment of $7.5 billion followed by

Expressed in US dollar terms, they include the effects of appreciation/depreciation

vi. FII Flow and Stock Market

Figure 8: Stock Market Performance

vii. Current Account Deficit

Figure 9: Q2 CAD at 0.6% of GDP

Net services receipts moderated on a y-o-y basis, primarily because of a fall in

Cumulatively for the April-February period, exports rose marginally by 2.52% in

Non-petroleum and non-Gems and Jewellery exports in February 2017 were

Non-oil imports in February were up by 13.65%, to $25.70 billion, from $22.61

ix. Rupee (₹)

That such a stable performance came in a year marked with unprecedented

Outlook for 2017-18: India

In addition, continued fiscal consolidation, by reducing government deficits and

Indian Petrochemical Industry

Petrochemical Industry in India

Petrochemical Industry Review of 2016 & Outlook for 2017

The global economic outlook continues to brighten a little, notwithstanding still-

The responsiveness of short-cycle US tight oil production to prices—and, in turn,

However, while producers raised prices based on feedstock costs, converters

Although some suppliers expected the drop in PE prices in Asia to be minimized

India-origin export PE cargoes are expected to be available in China, and

Overall demand-wise, a slow-moving consumer goods sector, and persistent weak

In fact, weak local demand in December 2016 presented a good opportunity to

A number of Indian state-owned energy companies are making major investments

Ethylene Capacity is further going to increase from 3907 KT in 2015-16 to 4842

Ethylene (KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E

Reliance Industries is constructing a 1.5-million m.t./year ethylene plant, expected

The propylene derivatives petrochemical project in Kochi is expected to be

Butadiene (KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E

There was an exportable surplus of 79 KT in 2015-16, which is expected to

Table 6: Styrene Demand Supply

Styrene (KT) 2014-15 A 2015-16 A 2016-17 E 2017-18 E