Kolkata-headquartered Haldia Petrochemicals Ltd (HPL) has unveiled plans to set up an oil-to-chemicals (O2C) project in Cuddalore, Tamil Nadu, to increase polymer production, including ethylene and propylene. The move aims to increase polymer supply to meet growing demand and proportionately reduce dependence on imports.
Speaking at the launch of the ambitious project, Navanit Narayan, Chief Executive Officer of HPL, stated, “This project aims to directly convert crude oil into vital chemicals like ethylene and propylene. We are seeking investors for the Cuddalore project, which is a venture at the global scale and is in talks with the central government for incentives. Our dialogues with financial partners are in the advanced stage. We are hopeful that we will be able to finalize the proposal very soon.”
Ethylene and propylene are key ingredients for manufacturing end-products ranging from shopping bags and car parts to water and sanitation pipes. Upon completion of this project, the cutting-edge HPL facility is expected to boast an impressive capacity to manufacture 3.5 million tonnes of these essential polymers annually. Once this project commences commercial production, India will be able to reduce polymer imports proportionately.
| India’s polymer import for calendar 2022 |
| Particulars | Volume (‘000 tonnes) |
| Polyvinyl chloride (PVC) | 1435 |
| Polypropylene (PP) | 960 |
| High density polyethylene (HDPE) | 595 |
| Linear Low Density Polyethylene (LLDPE) | 540 |
| Low Density Polyethylene (LDPE) | 340 |
| Polycarbonate (PC) | 229 |
| Ethylene-vinyl Acetate (EVA) | 182 |
| Polyamide (PA) | 170 |
| Chlorinated Polyvinyl Chloride (CPVC) | 164 |
| Polyethylene terephthalate (PET) | 140 |
Source: All India Plastic Manufacturers Association (AIPMA)
Expressing confidence in the ongoing negotiations with lenders, Narayan said, “The cutting-edge facility is designed to maximize value extraction, with 80 percent of the crude oil feedstock slated for direct conversion into high-value chemical products. The remaining part of the proposed project will be processed into conventional fuel products like diesel. We will be able to attract investment from major global and domestic players for the Cuddalore project.
Final decision by year-endAmid ongoing talks with potential lenders, the final investment decision (FID) is expected by year-end, with pending funding arrangements, the project’s construction and commissioning are anticipated to take at least four to five years. Once the final investment decision is concluded, HPL will order the necessary plant and machinery and begin construction on the project.
Additionally, HPL’s parent company the United States-based The Chatterjee Group is concurrently investing Rs 4,000 crore (approximately US$500 million) in a downstream chemical venture in Haldia, West Bengal, in addition to the proposed Cuddalore mega project. According to Narayan, state-of–the-art facility in Cuddalore may be completed by early 2026 and will produce approximately 300,000 tonnes of phenol and 185,000 tonnes of acetone annually, recognizing itself as the largest such complex in India.
| India’s polymer demand-supply balance sheet (‘000 tonnes) |
| Particulars | 2020-21 | 2021-22 | 2022-23 | 2023-24(f) | 2024-25(f) |
| Capacity | 14157 | 14190 | 14405 | 16162 | 16739 |
| Production | 12350 | 12857 | 11922 | 14995 | 15512 |
| Operating rate (%) | 87 | 91 | 83 | 93 | 93 |
| Import | 3601 | 4089 | 6344 | 4601 | 5250 |
| Exports | 1799 | 1024 | 490 | 351 | 380 |
| Net trade | (-)1802 | (-)3065 | (-)5854 | (-)4250 | (-)4870 |
| Demand | 14696 | 15913 | 17523 | 18832 | 20132 |
| Demand growth (%) | - | 8.3 | 10.1 | 7.5 | 6.9 |
Source: Chemicals and Petrochemicals Association (CPMA), India; (f)=Forecast
Robust demandHPL's investment proposal comes at such an important time, fuelled by the robust domestic demand for chemicals and the global petrochemicals industry's oversupply woes, exacerbated by China's record capacity additions last year. The apex industry body, the Chemicals and Petrochemicals Manufacturers’ Association (CPMA), in its annual report published for 2022, projected India’s overall polymer demand at 17.05 million tonnes for the financial year 2022-23, a rise of 7.2 percent from 15.9 million tonnes reported in the previous fiscal year. India’s polymer demand had increased by 7.7 percent in the financial year 2021-22 from 14.78 million tonnes in the preceding year.
CPMA estimates India’s cumulative polymer production at 13.69 million tonnes, at 90 percent of factories’ operational capacity in the financial year 2022-23, as against 12.86 million tonnes of actual output reported with the same operating rate in the previous financial year. Presently, India has a total production capacity of 15.14 million tonnes, a marginal increase from 14.23 million tonnes in the previous year.
Unfortunately, nearly a fifth of India’s polymer demand is met through imports. In the financial year 2022-23, CPMA estimates India’s polymer import at 3.93 million tonnes. Considering a total export of around 636,000 tonnes, India’s polymer trade deficit is estimated at 3.3 million tonnes, according to CPMA. While polymer exports declined substantially over the years, imports have increased.
Capacity expansionA recently published report reveals that Indian producers have been consistently devising strategies to expand their production capacity, aiming to cater to the escalating domestic demand and foster self-sufficiency in polypropylene. Consequently, the Indian industry could potentially witness an additional capacity of approximately 3 million tonnes per annum (MTPA) within the next three years, facilitated by Nayara Energy’s 0.5 million tonnes project, may come on stream shortly.
Three projects, one from each Hindustan Petroleum Corporation Ltd (HPCL), Chennai Petroleum Corporation Ltd (CPCL), and Indian Oil Corporation Ltd (IOCL), are anticipated to become operational in 2024. HPCL is slated to commence commercial production with its 1 million TPA project, while both CPCL and IOCL are projected to initiate their 475,000 TPA and 450,000 TPA of PP production, respectively, in 2024. Furthermore, IOCL and Gail India Ltd are preparing to launch commercial production for their 200,000 TPA and 500,000 TPA PP projects in 2025.
Nevertheless, these capacity expansions might prove insufficient to meet India’s mounting demand across existing and emerging applications. The projection indicates that India’s PP demand will continue its growth trajectory, thereby offering a promising prospect for global exporters. The consultancy firm TransGraph has estimated that the transportation, rubber, and plastic sectors will be pivotal in driving India’s PP demand to reach 7.84 million tonnes by the financial year 2026-27.
DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
