Petrochemical

Automotive plastics volumes to surge with EV transition – ICIS economist

Date: 20th April, 2023

Source: ICIS

Volumes of plastics used in the global automotive sector are set to surge, with the electric vehicle (EV) transition providing the kicker, an ICIS economist said. “New EV initiatives by governments and OEMs will foster even more rapid adoption,” said Kevin Swift, ICIS senior economist for global chemicals. “There will be a long-term trend of adopting plastic resins as a material of choice amid ongoing lightweighting,” he added. Swift gave a keynote address at the Plastics in Electric and Autonomous Vehicles Conference (EAV) hosted by the Society of Plastics Engineers (SPE) in Troy, Michigan, US. Comparing car models where multiple options are available, an EV averages about 159kg (351 lb) of plastics compared to 155kg for an internal combustion engine (ICE) vehicle, while a hybrid (gasoline/EV) vehicle actually came in the highest at 166kg, according to an ICIS analysis by Swift. Thus, as EVs gain market share over ICE vehicles, the volume impact will be magnified. Plastics should also make up a greater share of vehicle composition in the coming years. In Swift’s base case scenario, global EV sales as a percentage of total auto sales are poised to surge from 10% in 2021, to 29% by 2030, 51% by 2040 and 62% by 2050. 

Meanwhile, overall light vehicle sales are also projected to rise from 75.7m units in 2021, to 102.2m by 2050. In this base case scenario, average global plastics use per vehicle reaches 230kg by 2050, representing a 23.5m tonne market versus a 14.1m tonne market in 2021. In a more optimistic ‘net zero emissions’ scenario, the market for auto plastics reaches 25.5m tonnes, the economist noted.

The use of polypropylene (PP) as the primary resin in EV battery packs should lead to global PP consumption in light vehicles surging from around 61kg per vehicle today, to 99kg per vehicle by 2050, said Swift. In terms of volumes, global PP consumption from light vehicles would rise from 2.57m tonnes/year, to 10.30m tonnes/year market by 2050, he added. Other materials poised to benefit include polyurethanes and polycarbonate (PC). While North American EV market share of around 9.5% lags that of Europe at 18.2% and northeast Asia at 20.0%, it is poised to catch up, particularly with incentives from the US Inflation Reduction Act (IRA), said the economist. “The US will catch up. When we get our minds around to doing something, we do it,” said Swift, who also note that there is a greater chance the ‘net zero emissions’ scenario will play out. This scenario assumes an acceleration to achieve goals of 100% zero emissions in light vehicles, with faster adoption of EV technology propelled by new policies banning or severely limiting ICE technologies. On 12 April, the US Environmental Protection Agency (EPA) announced new, more ambitious proposed standards for emissions from light-duty and medium-duty vehicles starting with model year 2027. The American Fuel & Petrochemical Manufacturers (AFPM) came out against the proposed standards, saying they would “effectively ban gasoline and diesel vehicles”.

India’s supreme court orders the government to impose anti-dumping duty on LDPE

Date: 17th April, 2023

Source: Polymerupdate

The Supreme Court of India on Thursday ordered the government of India to implement the findings of the Directorate General of Trade Remedies (DGTR), under the Ministry of Commerce and Industry. The court directed the government to impose an anti-dumping duty (ADD) on Low-Density Polyethylene (LDPE) to protect the interest of domestic producers and prevent them from further injury allegedly caused by cheap imports. Following the government’s waiver of formal notices, the apex court directed it to file the counter affidavit in four weeks and the rejoinder affidavit, if any, within another two weeks interested parties.

The two-judge bench headed by Justice Krishna Murari and assisted by Justice Sanjay Karol passed an interim order in response to a case filed by the industry body, the Chemical and Petrochemical Manufacturers Association (CPMA). The court noted that the CPMA’s prayer, seeking implementation of various high court orders to impose an anti-dumping duty, had not been fulfilled by the government. Therefore, the court passed the interim judgment and ordered the government of India to impose the ADD according to the findings and severity of the injury caused to the domestic producers, determined by the authority, the DGTR in this case.

“We have also taken note of the averments that the non-levy of ADD is causing grave irreparable injury and prejudice to the Indian manufacturers on a daily basis. Accordingly, we direct, pending the final disposal of this petition, an interim measure to the respondent (the government of India) to impose a provisional ADD at the rate determined by the concerned authority earlier. The levy of such ADD shall be subject to the final adjudication in these proceedings,” the order reads.

Based on months of investigation, the DGTR recommended a heavy amount of ADD on LDPE and its associated products on March 31, 2022. However, the government never implemented the recommendation despite notifying the proposed duty levy on the same day. After due procedures and consultations made with overseas exporters to India, the DGTR recommended an ADD from US$17.05 to US$70.09 per tonne on various LDPE exporters, currently being imported from countries such as Saudi Arabia, Taiwan, and others. Major producing countries also execute shipments to India from third countries to avoid ‘country of origin’ and potential glare from Indian authorities.

Similarly, on March 31, 2022, the DGTR recommended ADD on LDPE or high-pressure polyethylene originating from countries such as Singapore, Thailand, the United States of America, and other countries, of as high as up to US$216.76 per tonne. The ADD was recommended at an amount equivalent to the lesser of the margins of dumping and injury to remove the price difference between the current prevailing market price and the landed cost of imported products.

India’s overall import of LDPE is estimated at 340,000 tonnes for the calendar year 2022, with domestic production remaining substantially lower than consumption. Additionally, India imports a substantial quantity of other products in the ethylene category, which increased substantially in the last few years.

In fact, the Department of Chemicals and Petrochemicals (DCPC), under the Ministry of Chemicals and Fertilizers, reported up to 250 percent increase in the import of various ethylene products between November 2022 and January 2023. Concerned over increasing imports, the DCPC convened a meeting recently and sought suggestions from stakeholders in the industry, including producers, users, and representative associations.

Polyethylene is a thermoplastic made by polymerization of the monomer ethylene. LDPE is a type of polyethylene produced using high-pressure reactors, either through tubular or stirred autoclaves. Reliance Industries Ltd (RIL) is the sole producer of LDPE in India.

Cabinet Committee on Investment Promotion approves petrochemical projects worth Rs 50,000 crore and investment of Rs 150 crore

Date: 12th April, 2023

Source: Hitavada

The Cabinet Committee on Investment Promotion under the chairmanship of Chief Minister Shivraj Singh Chouhan, in a meeting held on Tuesday at Mantralaya, gave approval to the revised proposal regarding the expansion of refinery located in Sagar Division and establishment of petrochemical project with an investment of about Rs 43,000 to 50,000 crore.

The establishment of this project will provide employment to about two thousand youths. Production is likely to start in this project by the financial year 2027-28. Under the project, petroleum by-products such as gasoline, diesel, ATF/jet fuel, LLDPE, HDPE poly propylene, bitumen, benzene etc. will be produced. With the establishment of the project, investment in the field of petroleum, chemical, petrochemical will increase in MP. With the availability of feedstock in the project, several downstream MSMEs will be set up in the area.

Approval was also given for investment of Rs 150 crore in Mohasa-Babai industrial area: An important investment of Rs 150 crore was also approved by the Cabinet Committee on Investment Promotion. Approval was also accorded to the revised investment proposal of Rs 150 crore by M/s Inox Air Products Limited in Mohasa-Babai industrial area of Narmadapuram district. With the establishment of this project, 200 tonnes per day of cryogenic medical and industrial gas will be produced from world-class technology-based air suppression unit. The establishment of this project will facilitate the supply of medical oxygen. Establishment of both the projects will lead to economic and social development of the area by providing employment to the youths. Industrial Policy and Investment Promotion Minister Rajvardhan Singh Dattigaon and MSME Minister Omprakash Sakhlecha and other members of the committee were present in the meeting.

India set to surpass China in need for oil as growth paths diverge

Date: 24th March, 2023

Source: Economic Times

A change is on the horizon for oil demand, with India set to eclipse China as the most important driver of global growth — and potentially the last, as the world shifts to a greener future. A swelling population, which has likely already surpassed that of China, will help to underpin that growth along with consumption trends. India’s transition from traditional gasoline and diesel-fueled transport is expected to lag other regions, whereas China’s adoption of electric vehicles is skyrocketing.

While India is unlikely to replicate the mammoth scale of China’s expansive oil network — the nation’s daily crude consumption is triple that of its neighbor — traders and producers looking to tap into diminishing global demand growth will be betting on the South Asian nation into the next decade. “India was always going to exceed China in a matter of time in terms of being the global demand growth driver, mainly due to demographic factors like population growth,” said Parsley Ong, the head of Asia energy and chemicals research at JPMorgan Chase & Co. in Hong Kong.

China’s economic awakening at the start of the century transformed the nation into a powerhouse consumer of commodities from crude to metals and grains, providing a boost to resource-rich countries across the world. For oil, the end of the boom times is approaching, with top refiner China National Petroleum Corp. recently calling a peak to Chinese oil consumption around 2030. The change of demand growth leader appears even closer.

China’s ‘last hurrah’

Industry veteran Ed Morse, the head of commodities research at Citigroup Inc., says China’s rebound from years of Covid restrictions will likely be the nation’s “last hurrah” for demand. Viktor Katona, the lead crude analyst at data intelligence firm Kpler, reckons India’s growth will surpass China from 2026. He also expects Indian oil demand to peak much later in 2036.

“China’s role as a global oil demand growth engine is fading fast,” said Emma Richards, a senior analyst at Fitch Solutions Ltd. in London. Over the next decade, China’s share of total emerging market oil demand growth will slip to 15%, from almost 50%, while India’s share will double to 24%, she said.

India is already playing a more prominent role in the oil market following the invasion of Ukraine more than a year ago. The South Asian nation has become a major consumer of Russian crude, turning the OPEC+ producer’s oil into fuels that are often shipped to other regions such as Europe and the US.

It’s not the first time India has been talked about as the new center of oil demand growth, with similar predictions made in the middle of the last decade. Should it materialize this time, the transition to the top spot will likely be far from smooth and bogged down by bureaucracy. State-run refiners have been slow at modernizing their operations, and still rigidly follow the old and cumbersome process of issuing tenders for spot purchases of oil, rather than taking a more agile and flexible approach of negotiating and signing deals directly with counter-parties. Still, India’s fast-growing crude appetite will position the South Asian nation as an attractive opportunity for overseas traders and producers over the longer term, said Vandana Hari, the founder of Vanda Insights in Singapore.

EV boom

India has lofty ambitions to transition its industries including transport to greener energy options, but the nation is lagging other major nations, meaning its reliance on fossil fuels is likely to endure for much longer.

In contrast, China’s adoption of electric vehicles has been fast, an ominous sign for long-term gasoline demand in the world’s biggest car market. EV sales in China nearly doubled to 6.1 million units in 2022, compared with 48,000 vehicles for India in the same period, according to BloombergNEF.

India's Feb crude oil imports jump 8% as demand hits over 2 decades high

Date: 23rd March, 2023

Source: Business Standard

India's imports of crude oil in February rose about 8% from a year earlier, government data showed on Wednesday, as fuel demand hit over 2-decade highs in the world's third-biggest oil importer and consumer.

Rising crude demand and a strong Indian economy bodes well for higher refinery runs and imports, in addition to cheaper Russian crude, said Refinitiv analyst Ehsan Ul Haq, adding he expects refiners to boost runs and imports as temperatures rise and people travel more.

Fuel demand in February hit its highest level in at least 24 years, data from the website of the Petroleum Planning and Analysis Cell (PPAC) showed this month. With Indian demand likely to rise further over coming months, crude imports should recover, said UBS analyst Giovanni Staunovo.

On a monthly basis, imports were down 6% to 22.57 million tonnes, PPAC data showed. The month-on-month drop in imports could also be seasonal, as February imports were lower last year as well, Haq said.

Russia tightened its grip on India's oil market in February, leaving African crude oil imports in India at the lowest level in at least 22 years.

Elsewhere, Indian Oil Corp, the country's top refiner, will reduce its yearly oil purchase from Kuwait by 20% starting in April. To compensate, India's IOC has increased its term crude volume with Iraq's Oil Marketing Company (SOMO) by 20,000 bpd.

Government amends export policy for biofuels

Date: 22nd March, 2023

Source: Economic Times

The government on Wednesday said the export of biofuel from special economic zones and export-oriented units are allowed for fuel as well as non-fuel purposes without any restriction, if the biofuel is produced by using imported feed stock. On August 28, 2018, the government had imposed restrictions on export of biofuels within days of putting similar conditions for its imports. A licence is required for both exports and imports of biofuels. Biofuels include ethyl alcohol, petroleum oil and oils obtained from bituminous minerals, bio-diesel and mixtures.

The Directorate General of Foreign Trade (DGFT) has amended that notification of 2018 "to the extent that export of biofuel from special economic zones/export oriented units, are allowed for fuel as well as non-fuel purpose without any restriction when produced using only imported feed stock". Special economic zones and export-oriented units are meant specifically for export purposes.

Indian chemical industry marching to $1 trillion by 2040

Date: 01st March, 2023

Source: Deccan Herald

Currently valued at around $220 billion, the Indian chemical industry is expected to touch $300 billion by 2025 and reach the $ tillion mark by 2040, fuelled by growth in per capita income and consumption levels, said Arun Baroka, Secretary, Chemicals & Petrochemicals, Ministry of Chemicals & Fertilizers.

"It is predicted that demand for the speciality chemical segment is expected to grow at a pace of over 15 per cent CAGR. With 100 per cent FDI allowed through the automatic route and tremendous headroom for growth, the Indian chemical sector is well positioned for receiving large FDIs from global MNCs,” Baroka said.

He was speaking at the 16th annual India Chemical Industry Outlook Conference and Exhibition organised by the Indian Chemical Council (ICC), the apex national body representing the Indian chemical and petrochemical industry.

The ICC released the white paper prepared by McKinsey & Company at the conference, which presented the 2040 outlook for the Indian chemical industry and benchmarks for India’s manufacturing competitiveness vs other key global chemical clusters.

Earlier, Bimal Goculdas, President ICC and MD & CEO of DMCC Specialty Chemicals Ltd while welcoming the participants, said that the current edition of the conference offered a unique opportunity for everyone, whether it’s a CEO, business owner, a start-up, an entrepreneur, or simply interested in the latest trends and developments.

Dr Srikar Reddy, Joint Secretary, Commerce while delivering the keynote address highlighted the recent CEPA with UAE which will boost the Indian chemical trade. “The CEPA is expected to increase the bilateral trade in goods to $100 billion within five years of the signing and increase trade in services to $15 billion,” he said.

India plans $2 billion incentive for green hydrogen industry

Date: 27th December, 2022

Source: Business Standard

India is planning a $2 billion incentive programme for the green hydrogen industry, three sources told Reuters, in a bid to cut emissions and become a major export player in the field.

The 180-billion-rupee ($2.2 billion) incentive aims to reduce the production cost of green hydrogen by a fifth over the next five years, said a senior government official and an industry manager working in renewable energy. It would do this in part by increasing the scale of the industry, they said.

The current cost in India is 300 rupees to 400 rupees per kg, said the manager.

The United States and the European Union have already approved incentives worth billions of dollars for green hydrogen projects.Hydrogen can be used as a fuel. It is made by splitting water with an electrical process, electrolysis. If the devices that do that, electrolysers, are powered by renewable energy, the product is called green hydrogen, a fuel free of greenhouse emissions.

The Indian aid could be announced in the Feb. 1 budget for the fiscal year beginning April 1, said the government official. All sources declined to be named discussing a budget proposal. The ministries of renewable energy and finance did not respond to queries sent by Reuters. Indian companies such as Reliance Industries, Indian Oil, NTPC, Adani Enterprises, JSW Energy and Acme Solar have big plans on green hydrogen.

Adani, led by the world's third-richest person, Gautam Adani, said in June that it and France's Total Energies would jointly create the "world's largest green hydrogen ecosystem".

The Indian government expects industry to invest 8 trillion rupees in green hydrogen and its derivative green ammonia by 2030, said the industry manager and another government official. Green ammonia is made by combining nitrogen with hydrogen using renewable energy sources; it can be used by the fertiliser industry or as a fuel or convenient means of transporting hydrogen.

The green hydrogen proposal is likely to be called "Strategic Intervention for Green Hydrogen Transition (SIGHT)" and will be split into 45 billion rupees for electrolyser manufacturing for five years and the 135 billion rupees for green hydrogen and green ammonia production for three years, the manager and second official said.

The incentive for making green hydrogen is likely to be 50 rupees per kg for three years, they said. India aims to sell 70% of the production to countries such as South Korea, Japan and in the European Union, an industry official said, adding that derivatives, including green ammonia, had an equally strong demand. The government is estimating global demand for green hydrogen will exceed 100 million tonnes by 2030, from just under 75 million tonnes now, according to other industry sources.

In February the government announced plans for India to make 5 million tonnes of green hydrogen annually by 2030, a figure that the first government official said could be doubled, depending on international demand. The government also plans for the country to achieve electrolyser manufacturing capacity of 15 gigawatts in phases by 2030. That would be almost 10 times current global capacity.

U.S.-based Ohmium International has commissioned India's first green-hydrogen factory in Bengaluru. Reliance Industries, Larsen & Toubro, Greenko and H2e Power last year announced plans to build gigawatt-scale factories. Indian oil refineries and fertiliser and steel plants annually use 5 million tonnes of hydrogen made from natural gas, called grey hydrogen. The process produces carbon dioxide. Higher gas prices have pushed the Indian grey hydrogen price to around 200 rupees per kg from 130 rupees a year ago.

PET bottle chip exports in Nov hit a new high in H2 2022

Date: 22nd December, 2022

Source: CCF group

According to the Customs, China PET chip export volume totals 443kt in Nov 2022, y-o-y growing 4.6%, including 47kt for HS code 39076910, y-o-y down 29%, and 396kt for HS code 39076110, y-o-y rising 11%. PET fiber chip imports totals 28kt, falling 26.4% on annual basis. It is estimated that the total export volume of PET bottle chip in November 2022 is around 420-430kt, an increase of 9-10% over the same period last year, setting a new record for monthly export delivery volume in the second half of the year.

China PET chip export volume totals 4.68 million tons in Jan-Nov 2022, y-o-y growing 37.6%, including 710kt for HS code 39076910, y-o-y up 13%, and 3.97 million tons for HS code 39076110, y-o-y rising 43%. According to the estimation of the two HS code and the delivery statistics of factories, the total export volume of PET bottle chip in the first 11 months is estimated at around 4.3 million tons, an increase of 39.5% year-on-year, which has far exceeded the total export delivery volume in 2021.

 The export order intake of China domestic PET bottle chip in Nov has reached around 390kt, an increase of more than 30% over the same period last year. In fact, export delivery volume is expected to be high from November to December due to delays in shipping schedule and the expiration of the implementation of contracts at the end of the year. In the first half of 2022, the delivery of many export orders sent by bulk carriers were delayed due to epidemic control, mostly postponed to the third or fourth quarter. In addition, delivery of some Sep-Oct orders were delayed again, increasing the export delivery volume in November. Moreover, the export market picks up in November, and the reasons are as follows: First, prices do fall to the year's low in the fourth quarter, and can even be said to be the low of the past two years; second, rigid demand still exists in the market, and small and medium-sized orders are relatively good; third, before the Christmas and Spring Festival holidays, overseas end-user plants have a replenish demand, basically the orders delivered after the Spring Festival.

In view of the fact that the export order intake of domestic PET bottle chip factories has been around 4.7 million tons since the fourth quarter of 2021, minus the current delivery volume of 4.3 million tons in the first 11 months of 2022, the export delivery volume in December is expected to be above 350kt, and there is a high probability that it will exceed 4.6 million tons in 2022. With regard to the current situation, export delivery may continue to perform well in the first quarter of 2023, with a monthly average of more than 350kt. However, there are many factors affecting the actual delivery, such as the Spring Festival holidays, so market participants are suggested to pay attention to the arrangement of the final shipping schedule.

Indian economy likely to grow at over 7% in FY23, says Arvind Panagariya

Date: 21st December, 2022

Source: Business Standard

The Indian economy is likely to grow at over 7 per cent in the current fiscal year, former Niti Aayog vice chairman Arvind Panagariya said on Wednesday, while observing that the growth rate should sustain next year too provided the forthcoming Budget does not have any negative surprises.

Panagariya further said recessionary fears have been around for a while but so far neither the US nor the EU has gone into recession. "From the viewpoint of India, in terms of headwinds originating abroad, the worst is probably behind us," he told PTI.

Earlier this month, the RBI revised down its growth estimate for FY23 to 6.8 per cent from the earlier 7 per cent, while the World Bank revised upwards its GDP growth forecast to 6.9 per cent, saying the economy was showing higher resilience to global shocks. "Overall, I still expect us to end the current fiscal year with a growth rate exceeding 7 per cent. Next year, the 7 per cent growth rate should sustain assuming the forthcoming Budget does not have any negative surprises," the eminent economist said.

Panagariya said capital outflows induced by the hikes in policy rates by the US Fed Reserve had placed the rupee under considerable pressure. "Those flows have reversed with positive net portfolio inflows in November," he said, adding that inflation in the US is also coming down, suggesting the worst may be over in that country as well. But in the meantime, according to Panagariya, the rupee has appreciated against currencies such as the Euro and Yen which may contribute to weakness in exports in the coming year. Even prior to this episode, the rupee had been overvalued, he added.

"So, I would lean in favour of further depreciation of the rupee against the dollar," Panagariya, currently a professor of economics at the Columbia University, said. Replying to a question on unemployment, Panagariya said going by the Periodic Labour Force Survey (PLFS), which is the most reliable household survey available, he does not see that the unemployment rate is high.

"Higher unemployment among the youth is not a new phenomenon. This rate has always been higher than the overall rate because youth do not take the first job they are offered. Instead, they wait in the hope of getting a better offer," he argued. Panagariya also pointed out that in recent years, due to rising urban incomes, parents are able to support their children for longer.

"As a result, the waiting period has become longer, which has resulted in an upward shift in this rate," he said, but pointed out that as per PLFS, the unemployment rate among those aged 15 to 29 years has fallen from 20.6 per cent in 2017-18 to 18.5 per cent in 2020-21. To buttress his argument, Panagariya said that based on usual status measure, unemployment rate stood at 4.2 per cent in 2020-21 compared to 6.1 per cent in 2017-18.

Noting that EPFO data also show a robust rising trend in net additions to its rolls, suggesting formalisation of the workforce at an accelerated pace, he said, "Compared with less than 8 million additions in each of the three preceding years, net additions in 2021-22 were 12 million." In the first half of 2022-23, net additions have already reached 8.7 million, he added.