Petrochemical Industry

Petrochemical Industry

Overview

The chemical industry contributes significantly to the economic stability and development of a country. It provides key linkages in terms of products and technical solutions to several downstream industries like engineering, automotive, consumer durables, food processing, etc. The global chemicals industry is the largest manufacturing industry in the world, with sales of approximately USD 2.5 trillion in 2010; the Indian chemical sector was estimated to stand at US $91 billion in 2011 and has the potential to reach US $134 billion by 2015.

Growth potential of the chemicals sector is immense, considering the current low per-capita consumption in the country. It is one of the fastest growing domestic sectors, comprising of both small and large scale enterprises, and is currently in a state of restructuring and consolidation. This movement aims to achieve product innovation, branch building, improved technical services and marketing abilities to stand through global competition. A recent report by global consultancy firm McKinsey suggests that around $350bn of the estimated $1tn world specialty chemical industry would move eastwards to Asia to meet manufacturing costs and downstream demand.

The petrochemical sector has been one of the fastest growing sectors in the Indian economy. From its modest beginnings in mid-sixties, this industry has come a long way. Today, plants of global capacities operate in specialized categories and supply to both local and global markets. Four main players dominate the petrochemical sector, namely, Reliance Industries Ltd. (RIL), Indian Petrochemical Ltd. (IPCL), Gas Authority of India Ltd. (GAIL), and Haldia Petrochemicals Ltd.

The Indian petrochemical industry is presently valued at $40bn and is expected to grow at 12-15% annually over the next five years, according to a report from the Associated Chambers of Commerce and Industry of India (Assocham). The sector currently employs more than 10 lakh people.

Factors that will drive growth in the chemical and petrochemical sectors

·         Compared to US and China, India’s per capita consumption of polymers (PO +PVC) is still in nascent stage. Opportunity to reach out to a large population and sustain the current economic growth would drive India’s polymer consumption.

·         Asia and Middle East, which provide abundant sources of petrochemical feedstock, are fast becoming hubs for foreign investments.

·         Indian government plans to establish new petroleum, chemical and petrochemical investment regions (PCPIRs) in states like Tamil Nadu and Karnataka.

·         Low cost infrastructure that India can offer will drive exports projected to reach $300bn by 2015.

·         Large unexplored reserves of oil and gas stand to create new opportunities.

Paints & Coatings

Paints & Coatings

The Indian Paints & Coatings industry is valued at $3.5 billion in terms of value and 2 million metric tons by volume. The current per capita consumption is 1.5 kilograms which is far lower than that of global and Asian per capita consumption of 20 kilograms and 5 kilograms respectively. Thus, the industry is expected to continue to exhibit double-digit growth from 2011 to 2015.

To meet this market demand, BASF develops and delivers innovations in the areas of Architectural and Industrial Coatings and help manufacturers to improve their cost competitiveness, quality and sustainability.

Being the world’s leading chemical company, BASF supplies innovative and environmentally friendly raw materials to the manufacturers in the paints and coatings industry. With the acquisition of Ciba, our product portfolio has expanded significantly and covers products ranging from resins to additives, pigments, dispersions, solvents, acrylates & intermediates.

The portfolio also encompasses environment friendly dispersions, lead-free pigments, oxygenated solvents and intermediates like Propylene Carbonate for architectural, automotive & industrial coatings, which reinforce our commitment to grow sustainability in the Paints & Coatings industry.

Paint and Coatings Industry Overview

The major change that has taken place in the coatings industry during the last twenty years has been the adoption of new coating technologies. Until the early 1970s, most of the coatings were conventional low-solids, solvent-based formulations; waterborne (latex) paints, used in architectural applications, accounted for 30–35% of the total. In the late 1970s, however, impending government regulations on air pollution control focusing on industrial coating operations stimulated the development of low-solvent and solvent less coatings that could reduce the emission of volatile organic compound (VOCs). Energy conservation and rising solvent costs were also contributing factors. These new coating technologies include waterborne (thermosetting emulsion, colloidal dispersion, water-soluble) coatings, high-solids coatings, two-component systems, powder coatings and radiation-curable coatings.

The following pie chart shows world production of paints and coatings:

The paints and coatings industry in the United States, Western Europe and Japan is mature and generally correlates with the health of the economy, especially housing and construction and transportation. Overall demand from 2011 to 2016 will increase at average annual rates of 1–2% in the United States and 1.5–2.5% in Western Europe. In Japan, however, consumption of paints and coatings will experience relatively slow growth during this period (0.3%) as a result of no growth in major markets such as automotive OEM, machinery and appliances.

In the emergent countries of the world, coatings are growing at a much faster rate. The best prospects for growth are in Asia Pacific (8–10% growth per year in the near future), Eastern Europe (6%) and Latin America (6%). Growth of coatings in China is expected to continue at 8–10% per year, and in India and Indonesia at 5–10%. Growth in value terms will be even higher as a result of the production of relatively higher-valued coatings. Most of the major multinational paint producers, including PPG, Akzo Nobel, Kansai Paint, Nippon Paint, BASF, DuPont, Chugoku Marine Paint, Valspar, Sherwin-Williams and Hempel, have production in China. The multinational producers should gain even more presence in the developing world as living standards increase and per capita consumption of coatings rises.

Through the next five years, air pollution regulations will continue to be a driving force behind the adoption of new coating technologies. Despite the relatively slow growth in demand anticipated for coatings overall, waterborne and high-solids coatings, powders, UV curable and two-component systems appear to have good growth prospects.