PETROCHEMICAL INDUSTRY IN INDIA: VISION 2025 & BEYOND INDIACHEM 2018 Janardhanan Ramanujalu, VP & Regional Head, S. Asia & ANZ, SABIC October 5, 2018
PRESENTATION OUTLINE • About SABIC • Indian Chemical Industry • Feedstock Challenges • PCPIR: An Enabling Concept • Collaboration & Partnership as Way Forward 2
Classification: General Business Use SABIC AT-A-GLANCE 1976 50 3 rd 120 th 4 34,000 Company Employees Countries of Largest global Largest public Core established around the world operations chemical company* company in the world* businesses 86 4.9 39.9 US$ B ** US$ B ** US$ B ** ≈ 150 11,534 64 Total Net Annual New products Global patent World-class assets income revenue each year filings plants worldwide 3 *Forbes 2018 **Billion
Classification: General Business Use SABIC IN INDIA- 25 YEARS JOURNEY SABIC FOR INDIA SABIC FOR INDIA SABIC FOR INDIA SABIC FOR INDIA SABIC FOR THE WORLD SABIC FOR THE WORLD SABIC FOR THE WORLD SABIC FOR THE WORLD SABIC WORLDWIDE BROUGHT TO INDIA SABIC WORLDWIDE BROUGHT TO INDIA SABIC WORLDWIDE BROUGHT TO INDIA SABIC WORLDWIDE BROUGHT TO INDIA MANUFACTURING/VADODARA MANUFACTURING/VADODARA MANUFACTURING/VADODARA MANUFACTURING/VADODARA SABIC TECHNOLOGY CENTER SABIC TECHNOLOGY CENTER SABIC TECHNOLOGY CENTER SABIC TECHNOLOGY CENTER SABIC INDIA PVTLTD,GURGAON SABIC INDIA PVTLTD,GURGAON SABIC INDIA PVTLTD,GURGAON SABIC INDIA PVTLTD,GURGAON BENGALURU BENGALURU BENGALURU BENGALURU Chemicals Business: Chemicals Business: Chemicals Business: Chemicals Business: Total Area : 29 Acre Olefins, Aromatics & Chlor Alkali, Glycols and Land Area: 46 Acre Compounding Plant Compounding Plant Compounding Plant Compounding Plant Oxygenates, OXO alcohols, Investment: > USD 100 Million Linear Alpha Olefins (LAO) Plant Start up : Q4 1993 Inaugurated in October 2013 Product Capability: Advanced Polymers Business: Polymers Business: Polymers Business: Polymers Business: More than 360 research scientists PP, LDPE, HDPE, LLDPE, PVC, engineering compounded PS, PET and range of &engineers Engineering Thermoplastics thermoplastics Sheet Plant Sheet Plant Sheet Plant Sheet Plant 4 STAR GRIHA rating by ADaRSH LEED Agri Agri- Agri Agri - -Nutrients - Nutrients Nutrients Business: Nutrients Business: Business: Business: Plant Start up : Q4 2009 India– Gold certified/100% Export AMMONIA, UREA & DAP Product Capability: Roofing, Skylight, Oriented Unit for captive SABIC Research Cladding, Sound Barrier BENGALURU RESEARCH CENTER VADODARA MANUFACTURING SITE JUBAIL GELEEN 4
INDIAN CHEMICAL INDUSTRY 5
Classification: General Business Use CHEMICALS : TOUCHING OUR LIVES TEXTILES TEXTILES TEXTILES TEXTILES CONSUMER CONSUMER CONSUMER CONSUMER BIOTECHNOLOGY BIOTECHNOLOGY BIOTECHNOLOGY BIOTECHNOLOGY APPLIANCES/ELECTRONICS APPLIANCES/ELECTRONICS APPLIANCES/ELECTRONICS APPLIANCES/ELECTRONICS AGRO CHEMICALS AGRO CHEMICALS AGRO CHEMICALS AGRO CHEMICALS AUTOMOBILE INDUSTRY AUTOMOBILE INDUSTRY AUTOMOBILE INDUSTRY AUTOMOBILE INDUSTRY PHARMACEUTICAL CHEMICALS PHARMACEUTICAL CHEMICALS PHARMACEUTICAL CHEMICALS PHARMACEUTICAL CHEMICALS ELECTRONICS ELECTRONICS ELECTRONICS ELECTRONICS FINE CHEMICALS FINE CHEMICALS FINE CHEMICALS FINE CHEMICALS AGROCHEMICALS AGROCHEMICALS AGROCHEMICALS AGROCHEMICALS PERFORMANCE CHEMICALS PERFORMANCE CHEMICALS PERFORMANCE CHEMICALS PERFORMANCE CHEMICALS PHARMACEUTICALS PHARMACEUTICALS PHARMACEUTICALS PHARMACEUTICALS SPECIALTY CHEMICALS SPECIALTY CHEMICALS SPECIALTY CHEMICALS SPECIALTY CHEMICALS MASS TRANSPORTATION MASS TRANSPORTATION MASS TRANSPORTATION MASS TRANSPORTATION BULK INTERMEDIATES BULK INTERMEDIATES BULK INTERMEDIATES BULK INTERMEDIATES CONSTRUCTION CONSTRUCTION CONSTRUCTION CONSTRUCTION BASIC CHEMICALS BASIC CHEMICALS BASIC CHEMICALS BASIC CHEMICALS FRAGRANCES FRAGRANCES FRAGRANCES FRAGRANCES FLAVOURS FLAVOURS FLAVOURS FLAVOURS AGRI AGRI AGRI AGRI- - -NUTRIENTS - NUTRIENTS NUTRIENTS NUTRIENTS 6
Classification: General Business Use GLOBAL CHEMICALS FORECAST GLOBAL GLOBAL CHEMICAL INDUSTRY (USD GLOBAL GLOBAL CHEMICAL INDUSTRY (USD TRILLION CHEMICAL INDUSTRY (USD CHEMICAL INDUSTRY (USD TRILLION TRILLION) TRILLION ) ) ) INDIAN CHEMICAL INDUSTRY (USD BILLION) INDIAN CHEMICAL INDUSTRY (USD BILLION) INDIAN CHEMICAL INDUSTRY (USD BILLION) INDIAN CHEMICAL INDUSTRY (USD BILLION) [VALUE] [VALUE] [VALUE] [VALUE] 6.7 6.7 6.7 6.7 5.6 5.6 5.6 5.6 4.6 4.6 4.6 4.6 [VALUE] [VALUE] [VALUE] [VALUE] 3.8 3.8 3.8 3.8 [VALUE] [VALUE] [VALUE] [VALUE] [VALUE] [VALUE] [VALUE] [VALUE] FY 15 FY20 FY25 FY30 FY10 FY15 FY 20 FY 25 Global Chemicals Market is expected to grow at CAGR ~4% from USD 4Tn Now to USD 6.7 Tn in 2030 Indian Chemical Industry expected to grow to US$300 billion(2025)at CAGR ~ 9% Sources: IHS Markit, CEFIC, GOI website 7
Classification: General Business Use C2: ETHYLENE SUPPLY & DEMAND (MMT),INDIA � Ethylene deficit to grow 13.7 though current capacity addition may bring some respite for the next 2-3 years 8.6 8.3 but urbanization will drive the 6.4 demand in the long term. 5.5 2017 2023 2030 Domestic Demand Capacity to produce � Indicator: India’s urbanization will add another 315 million people to our cities; which is current population of US thus boosting demand by 2040 Source: IHS: Ethylene Chemical Economics Handbook, 31 May 2017 8
Classification: General Business Use C2 : GROWTH RATE OF ETHYLENE BY MAJOR END USE , INDIA 2016-2030 15 MMTA 5.5 MMTA Ethylene 16.0 14.0 13.9% 2.08 � Ethylene and its 12.0 million metric ton 9.5% 2.39 intermediates 10.0 industry will be value- 1.44 1.08 8.0 creating segment for 1.63 3.85 Indian market; where 6.0 0.71 7.4% SABIC can play an 2.39 4.0 0.34 0.81 important role 0.20 4.91 2.0 1.01 3.34 1.67 0.0 2017 2025 2030 Alpha-olefins Ethylene dichloride EO LDPE LLDPE HDPE � Ethylene demand growing with 11% CAGR and will crosses to 13 million metric tons by 2030. � PE accounted for 66% of total ethylene demand, followed by EO (15%) and EDC (6.2%). Source: IHS: Ethylene Chemical Economics Handbook, 31 May 2017 9
Classification: General Business Use C2 : ETHYLENE DEMAND (2018),INDIA Ethylene Prod. by Feedstock Global Ethylene Capacity Capacity: 5.0 MMT Total ~165 MMT Naphth INS, 4% NE Asia, a M.East, 26% 49% 20% Others 2% Africa, 1% Butane SE Asia, 1% 7% Ethane Europe & Propan 39% CIS, 17% e S.America, N.America, 9% 3% 22% � Approx. 80% is consumed to make Polymers. Source: IHS: Ethylene Chemical Economics Handbook, 31 May 2017 10
Classification: General Business Use C3 : PROPYLENE SUPPLY & DEMAND (MMT), INDIA 10.00 � Propylene deficit to grow as the current capacity is likely 8.13 to gets absorbed in the long 6.87 term. 5.19 5.00 2017 2023 2030 Domestic Demand Capacity to Produce � PP accounted for more than 95% of the total propylene demand. Source: IHS: Propylene Chemical Economics Handbook, 31 May 2017 11
Classification: General Business Use C3: PROPYLENE DEMAND (2017),INDIA Propylene demand by end use Global Propylene Capacity Propylene by Process Demand: 5.2 MMT Total 124 MMT On On On On purpose purpose purpose purpose 18% 18% 18% 18% Steam Steam Steam Steam N.America Butanols, Cracker Cracker Cracker Cracker 7% 19% S. America Polyprolyle Polyprolyle Polyprolyle Polyprolyle 0.35% 34% 34% 34% 34% Isopropan Europe & CIS ne, 96% ne, 96% ne, 96% ne, 96% ol, 1.00% 3% Africa 39% Oligomers, M.East 18% 0.30% INS PO, 1.00% NE Asia 2 EH, 9% 1.00% SE Asia Cumene, Refinery Refinery Refinery Refinery 1% 0.30% Others, Grade Grade Grade Grade 4% 0.20% 48% 48% 48% 48% � >95% percent propylene was consumed for polypropylene production. Source: IHS: Propylene Chemical Economics Handbook, 31 May 2017 12
FEEDSTOCK CHALLENGES 13
Classification: General Business Use DEMAND-SUPPLY GAP PROJECTIONS FOR PRODUCTS 2017 2017 2030 2030 2040 2040 2017 2017 2030 2030 2040 2040 (MMT) Surplus/Deficit Surplus/Deficit Surplus/Deficit Surplus/Deficit Surplus/Deficit Surplus/Deficit Surplus/Deficit Surplus/Deficit over 2017 over 2017 over 2017 over 2017 over 2017 over 2017 over 2017 over 2017 Capacity Capacity Capacity Capacity Demand Demand Demand Surplus/Deficit Demand Surplus/Deficit Demand Surplus/Deficit Surplus/Deficit Demand Demand Demand Capacity Capacity Capacity Capacity Demand Demand Demand Demand Capacity Capacity Capacity Capacity Ethylene (Derived Demand) 6.26 5.25 1.10 12.96 (6.71) 24.88 (18.62) Propylene (Derived Demand) 5.24 4.46 0.77 9.11 (3.88) 14.30 (9.06) Styrene - 0.69 (0.69) 1.23 (1.23) 1.73 (1.73) Butadiene 0.56 0.29 0.75 (0.18) 1.42 (0.85) 0.28 Benzene 1.99 0.45 1.53 1.68 0.30 2.57 (0.58) Methanol 0.27 1.97 (1.69) 3.64 (3.37) 5.54 (5.27) India needs continuous investments to avoid huge deficits over next 10-20 years • 14 Souce: CPMA
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