Its report, ‘Polymer Demand in the Indian sub-continent’, claims there is massive investment occurring in the region’s petrochemical, polymer production and downstream plastic processing industries, driving strong growth in polymer demand.
Thermoplastics will surpass 20m tonnes by 2020
It forecasts 8% per year average increases in the Indian sub-continent over the next five years, with levels of annual growth varying from 5% in Sri Lanka to up to over 8% in India and claims its thermoplastics market will surpass 20 million tonnes by 2020.
Sarah Phillips, AMI Consulting, told FoodProductionDaily, Reliance is by far the largest producer within the Indian subcontinent with an estimated capacity of 5.4 million tonnes in 2014.
“Other significant producers are: Indian oil Corporation, Haldia Petrochemical, GAIL India Limited, Hindustan Petroleum Co., Dhunseri Petroleum & Tea, Supreme, Styrolution and Finolex Industries,” she said.
The market in the region is dominated by India on account of its huge population and high GDP. However, growth is driven by its increasingly globally-minded governments that are introducing policies to encourage foreign direct investment and facilitate closer integration with the worldwide economy, to drive investment in petrochemicals, polymer production and downstream plastic processing.
Growth in the region is fuelled by policy relaxations and a rising urbanisation of a large, youthful, population, leading to greater consumer spending for items that require plastics - from packaged goods to mobile phones and automobiles.
Challenges ahead
While much of these products are still imported, there is now considerable investment taking place in plastics processing to support manufacturing investments, driving growth in polymer demand.
The report claims those that understand and participate in this market now will reap the benefit of future growth but there are challenges, including lack of sufficient local polymer production; exchange rate fluctuations of local currencies against the dollar and power supply in the sub-continent is erratic and unreliable.
Lack of sufficient local polymer production is a major obstacle faced by many plastics processors in the region with each country besides India being heavily or even entirely reliant on resin imports depending on the country in question; these imports are mainly sourced from India, the Middle East and South East Asia.
Exchange rate fluctuations of local currencies against the dollar make it harder to compete against cheaper Chinese imports of finished goods and the power supply can dramatically reduce effective utilisation.
However, in India, the government is seeking to address these issues and in September 2014, it announced its “Make in India” initiative, to catalyse Indian manufacturing to make the country a globally recognised manufacturing hub.
“It is clear plastics will be called on to play a vital role in this changing region and the plastics industry will benefit from national efforts to encourage and improve manufacturing,” added Phillips.