Shivaleela.N 12031EIB25
Abstract The global demand for plastic increased after 21th century and it continues to increase over the years. There is wide scope for exports and import with nurturing competitiveness of each country in the global scenario. Plastic is one material produced in India without importing any of the raw materials. Though India’s contribution in the world trade of plastics is considerably very low, it has got huge unexplored markets to explore and meet the potential demands. China is one country which captured majority market in Asia by encouraging the exports through Export Promotion council for Plastics besides encouraging the production and export, it is also providing valuable information, opportunities and inputs to the manufacturers. The export of plastics had evidently increased from India due to effective utilization of new technology increasing standards and effective supply chain management which includes distribution, logistics, transportation etc., with effective utilization of resources India can hope to overcome china in export market share in Asia.
Table of Contents
Chapter
Title
1
Introduction to Plastic Industry
2
Asian Region Polymer Industry
3
Plastic Industry in INDIA
Page Number
Introduction to the Plastic Industry The global plastics industry is marked by dynamic growth with both quantity and quality aspects helping boost the upswing. For many years now, overall population growth, a good global economic climate and ongoing substitution processes in favor of plastic have combined to foster steady expansion in the sector. Plastic has occupied a major role in the lifestyle of the 21st century. At present, the global GDP of the world is around US $ 32 trillion. Out of this, the value of chemical output alone contributes to 5percent of it. Commodity plastics contribute US $ 90 billion that is 5.6 percent of the entire chemical output and polyolefin output is US $ 61 billion that is 3.8 percent of the chemical output. This gives us an idea of the size plastic industry and the significance that it holds in the global scenario. This becomes even more significant when the global polymer industry is growing by almost twice the rate of the global GDP. The demand for the major polymers is growing at a rate of 5.2 percent annually and polyolefin alone make up for the 63 percent of the entire polymer industry. The demand for Polyolefin is growing at an even faster rate of 5.6 percent per year. The global demand for polymers is139.3 MMTA out of which polyolefin form 89.04 MMTA. There are tremendous capacity expansions that are happening for polymers all over the world. At present, the global capacity for polymer production is around 170 MMTA and is growing at a rate of10.5 percent per annum. Out of this, more than 35 percent of the capacity is in Asia – pacific region and around 28 percent of the capacity is in the North America. Western Europe contributes to around21 percent of the entire capacity. These three regions form the major polymer production regions of the world OBJECTIVE
To give a overview of the plastic industry. To provide information regarding leading companies in the industry. To focus on distribution and logistics of the industry. To identify the solution for the challenges in distribution and logistics.
Asian region polymer industry Asia is one of the fastest growing regions of the world. In the early nineties, the growth rate of theentire region (real GDP) was more than 9 percent (without Japan). There was a slump in the midninetiesdue to the Asian crisis. But the region has recovered well in the recent times and the growthrate of the region is hovering around 6 percent. China and India are two major countries in the region with a growth rate of 10 percent and 5.5 percent respectively. Of the global GDP, around 27 percent ofthe share comes from Asia and this is increasing steadily for
past few years.Asian chemical industry is valued to be at US $ 331.5 billion and is growing steadily at 9 percentannually. Asian region isattracting more than 50 percent of the new business opportunities of the entire globe. The demand formajor polymers in the region is 64 MMTA and is growing at a rate of 7.2 percent per annum. Thedemand for Polyolefin is around 42 MMTA and is growing at a rate of 7.6 percent per annum.China and India will play a major role in the Asian region in the future. Boththese countries will occupy more than 50 percent of the entire demand share of the Asian region.
Plastic Industry in India The plastic industry in India has made significant achievements since its modest but promising beginning by commencing production of polystyrene in 1957. The chronology of manufacture of polymers in India is summarized as under: • 1957 – Polystyrene • 1959 – LDPE • 1961 – PVC • 1968 – HDPE • 1978 – Polypropylene The economic reforms initiated in 1991 brought major changes in the structure of the domestic petrochemicalindustry.De-licensing and deregulation allowed the market forces to determine growth and investment.Liberalization of trade policies and lowering of tariffs enabled the domestic industry to compete with theglobal petrochemicals industry.As a result, major international companies from various sectors such as automobiles, electronics,telecommunications, food processing, packing, healthcare etc. have set-up large manufacturing bases in India.Joint ventures, foreign investments, easier access to technology from developed countries have opened upnew vistas to further facilitate the growth of this industry. Quite a no of foreign players have set up 100% owned companies in India in the plastics processing and machinery industry sectors. Foreign equity participation in the petrochemical industry has been increased to a 51% stake (a majority stake). However, the polymer manufacturers and other downstream industries are free to set up projects 100% on their own equity. Some examples of the international companies that have set up projects in India on their own are: POLYMER MANUFACTURING: BASF Styrenics,Bayer ABS, LG Polymers, Compounding, Clariant, DSM, Dupont & GE Plastics. CONVERTING INDUSTRY: 3M, Baxter, Delphi (Automotive Parts), Huhtamaki (Plastic Film Converter), Moser Baer, Visteon (automotive Parts) & Terumo Penpol. MACHINERY:Cincinnati Mailcron,Nissei& Side. 2
The above is not a comprehensive list. Some initially started as joint ventures but later, when the Government of India granted permission, they acquired remaining equity stake from the Indian partners. Additionally, quite a many joint ventures have been formed in India. Some notable joint ventures are: MachinoBasell (compounding), Mamta Brampton (Machinery). While it is estimated to be fragmented across more than 20,000 processors, the large processors are less than 100. These 100 have about 35% share of the plastics processing industry. The major sectors in which large processors are present are: PVC pipes - the largest producer is Finolex Industries with capacity of 60,000 MT/year. BOPP film - the largest producer is Cosmo Films with the capacity reaching almost 60,000 MT in 2004. BOPET film - the largest producer is Polyplex with the capacity of 80,000 MT out of which 40,000 MT is constructed in Thailand. Wire & Cable - the largest producer is Finolex Cable with estimated consumption of PVC at 35000 MT/Year and PE at about 5,000 MT/year. PE/PP raffia (film fiber) generally has larger processors with average capacity of about 10,000 MT/year. Some notable processors are: Jai Corporation & Big Bag. Moser Baer is the largest processor of CD, DVD etc and consumes about 25,000 MT/year of polymers. Cast PP film sector has about 7 processors with the total capacity of about 35,000 MT/year PP spun fiber has about 10 processors with the total capacity of about 50,000 MT/year Calendared PVC film segment is spread among 20 processors with the total capacity of about 150,000 MT/year Plastiblends India is the largest master batch manufacturer with the capacity of about 20,000 MT/year. However, Indian plastics industry is yet to realize its full potential. Compared to per capita consumption ofplastics in USA at 109 Kg, China at 29 Kg and Brazil at 32 Kg, India at 5.8 Kg is still in nascent stage. USAconsumption has reached saturation level, while China’s higher levels of consumption are primarily due toexports. India has the advantage of high population and is expected to maintain high economic growth therebypropelling India’s plastics consumption to new levels in coming years. Currently, the per capita consumptionof plastic products in India is growing and is moving towards 2.5 times GDP growth.Various sectors such as agriculture, packaging, automobiles, electronics, telecom, healthcare, infrastructure,transportation and consumer durables, have been major drivers of growth in plastic consumption.A large investment in telecom, ports, roads, power, and railways, has ensured that this sector continues togrow at more than 10% p.a., for several years to come. The
focus on plasticulture in the agricultural sector –envisaged coverage of 17 mn hectares under micro-irrigation schemes, will further boost the prospects of the plastics industry. The plastics processing industry is a source of great potential for global businesses. There istremendous scope for innovative technological up gradations and thus rapid growth of the sector.
Structure of Plastic Industry The plastic industry chain can be classified into two primary segments, viz., the upstream which is themanufacturing of polymers and the downstream which is the conversion of polymers into plastic articles.The upstream polymer manufacturers have commissioned globally competitive size plants with importedstate-of-art technology from the world leaders. The upstream petrochemicals industries have also witnessedconsolidation to remain globally competitive. The downstream plastic processing industry is highly fragmented and consists of micro, small and mediumunits. Presently, 75% are in the small-scale sector. The small-scale sector, however, accounts for only about25% of polymer consumption. The industry also consumes recycled plastic, which constitutes about 30% oftotal consumption. Plastic processed articles which were earlier exclusively reserved for small scale sector has now been de-reserved.The micro small and medium enterprise (MSME) act 2006 increased the investment in plant and machineryto Rs 5 crore and the current exemption on excise duty is Rs 1 crore. This initiative helped the industry to Increase competitiveness and meet the global challenges. The domestic downstream industry comprises of three broad segments viz. injection molding, blow moldingand extrusion and caters to the requirements of a wide array of applications like packaging, automobile, consumer durables, healthcare, etc.
Status of Plastic Processing Industry The overall turnover of the plastics processing industry that currently stands nearly at Rs1000bnthe number of processing units is expected to increase to 40,000, which will in-turn also Increase the employment potential of the sector. Independent studies show that the industry that currently hires more than 4 mnpeople and7 mn people by the year 2015. More than 33,000 new machines were installed in the domestic processing sector during the decade between2001-02 and 2009-10. Consequently, processing capacity more than doubled from ~8.2 MMT in 2001-02 to ~19 MMT in 2009-10 adding additional capacity of ~11 MMT during the decade with investments of overRs 100 bn.
Among the various segments in the processing sector, the injection molding segment accounted for over 60%of all new machines installed between 2001-02 and 2009-10 with investments of over Rs 50 bn. In terms oftonnage, however, extrusion segment witnessed the maximum increase of over 7.3 MMT accounting for over68% of the incremental processing capacity.
Growth Prospects for Plastic Processing: 2014-2015 Additional 40,800 plastic processing machines are expected to be installed by 2014-15 in the Indian plasticprocessing industry. 26,700 machines are to be added in the injection molding segment; 3,900 machines inthe blow molding and 10,200 machines are to be added in the extrusion segment. Status of Polymer Plastic Industry Polymers Plastic Demand growth in India Polymers registered rapid growth in 1970s, 1980s and 1990s growing at the rate of 22.5 times the GDPgrowth. The huge demand attracted investment, which led to massive increase in the capacity within thecountry and thus progressively reduced our dependence on imports. In the first decade of the 21st Century(i.e. between 2000-01 and 2009-10), the demand for plastic raw material got more than doubled from 3.3MMT to 6.8 MMT. The demand witnessed (CAGR of 13%) during 1995-96 to 2000-01could not be sustainedbetween 2001-02 and 200506 and the CAGR went down to 5.7%. However, the demand has now picked upand has averaged 12% between 2006-07 and 2009-10.
Over the years the main polymer production capacities have come up in the western part of India in Gujaratand Maharashtra (RIL & IPCL), though there are production facilities in other parts of the country as well likeHPL in the East, GAIL in the North and Chemplast in the South. Taking advantage of liberalization, the Indianpetrochemical industry invested approximately Rs 350 bn in the 1990s, raising the domestic polymer capacityfrom less than 0.5 MMT in 1990 to 4.2 MMT in 2000-01. Subsequently, the second phase of polymer capacityexpansion (post 2001) raised the country’s total capacity to 5.6 MMT in 2008-09. Currently polymer capacity in the country has reached 6.8 MMT (2009-10) and after commissioning of IOC, Panipet, Haryana and OPal, Dahej, Gujarat (Unit of ONGC) plants, it almost increased to 8.2 MMT by end 2010-11.
Status of Plastic Exports From a meager export turnover of US $ 16.5 mn in 1955-56, the exports from the Indian plastic industry has reached US $ 3.6 bn in 2009-2010 and is poised to well exceed the US $ four bn mark in the near futureand has targeted to reach US $ 10 bn by 2014.
