Chemical Weekly reposted this
$1 trillion chemical industry is pie-in-the-sky, but opportunities abound At the recently held India Chem event much was said about the bright prospects for India’s chemical industry. There were several statements that India is emerging as a global centre for chemical manufacturing, which, considering the size of the industry and projects in the offing can only be described as a ‘gross exaggeration.’ Even before, much was made of forecasts that India’s chemical market will reach $1 trillion by 2040, but, realistically speaking, this is unlikely. The drivers for growth in India’s chemical industry stem from both the domestic market opportunity and exports. In petrochemicals -- the biggest chunk -- over the last couple of years, we have seen several projects getting commissioned: for phenol/acetone, acrylate monomers, some synthetic rubbers (styrene butadiene and butyl), polyolefins, etc. In the next 2-3 years new capacity for styrene, oxo-alcohols, acrylic acid & acrylates, PVC resin, bisphenol-A, polycarbonate, among others, will come onstream. What is noteworthy is that these are coming up on the basis of fundamental viability, and are not reliant on extraneous support. But as my Point of View in the October 28 issue of Chemical Weekly points out, despite these investments, in most instances, the anticipated demand growth will outstrip incremental supply, and imports will continue. India is unlikely to be a major player in global markets for commodity chemicals and investments made here will be largely for meeting domestic needs, and exports will be, at best, a fly-wheel to keep operating rates high. From the perspective of contributions to earnings too, domestic sales are expected to weigh in better than exports – especially as the latter is often done at marginal costing due to competitive pressures, which have risen sharply of late. In commodity chemicals, investments gravitate either to where the feedstock are abundant or where the market opportunity is sizeable and growing. More often than not, the latter is the factor in India’s favour and will drive investment decisions. Never mind the $1 trillion mirage – there is a lot to do here even to get three-quarters of the way! The full opinion piece is here: https://lnkd.in/dXiC_EWc #petrochemicals #Indianchemicals #specialitychemicals #investments #chemicalindustry #chemicalmarkets #competitiveness #chemicalexports #chemicaltrade #fertilisers #growthdrivers