As India plans to boost its oil refining and petrochemicals capacity, its petrochemical exports are expected to face tough competition globally with increasing Chinese capacity already creating pressure in the global markets, said Toril Bosoni, head of oil industry and markets division, International Energy Agency.
In an interview, Bosoni said that currently there is severe pressure on the global petrochemical industry with China, a traditional importer of petrochemicals, expanding its domestic manufacturing capacity. She further said that domestic demand in India would be robust going ahead.
Bosoni said, “We are seeing that this expansion and capacity in China utilizing it (oil). It’s really putting pressure on other petrochemical producers in the region, in Europe. The European petrochemical utilization rates were the lowest and they have been since the early 1970s. It’s putting pressure on petrochemical producers in Asia, (South) Korea and Japan, and also in the Middle East.”
“So, what we are seeing now, China is importing the feedstock, instead of the petrochemical products and this is changing the dynamics. And we see this to continue in the coming years. China is still adding petrochemical capacity which puts strain on petrochemical producers worldwide.”
On the Indian petchem sector, the IEA official said: “I think if we look at the India market.. so the petrochemical products, given the growth of the Indian economy and Indian manufacturing, there’s definitely growth with these products in India. On a global level, I think we will see continued competition and pressure on margins and profits.”
The statement gains significance as India plans to scale up its refining capacity from the current 250 million tonne per annum to 450 million tonne per annum by 2030 and aims to a become a hub for petroleum and petrochemical products.
On Wednesday, IEA released a report wherein it noted that the growth the petrochemical sector in India will be smaller than the global average during the period of 2023-2030. It said that on a global basis, the most important driver of oil demand growth over the medium term is projected to be petrochemicals, accounting for about 2.7 million barrels of additional oil product demand during 2023‑2030.
“Where this demand takes place is largely the result of patterns of investment in production facilities, which typically takes around five years to progress from final investment decision to commercial operations. We estimate that a combination of new plants and incremental expansions will see Indian feedstock demand rise by about 210 kb/d (thousand barrels per day) over the period,” said the report titled ‘India Oil Market Outlook to 2023’.
In terms of oil demand, IEA on Wednesday projected that India is set to surpass China in terms of oil demand growth by the year 2027. In its report, the IEA said that India’s oil demand will reach 1.2 million barrels per day during the period of 2023-2030, accounting for more than one-third of the projected global demand growth of 3.2 million barrels per day.
“India is forecast to be the single largest source of global oil demand growth from 2023 to 2030, narrowly ahead of China. Underpinned by strong economic and demographic growth, the country is on track to post an increase in oil demand of almost 1.2 million barrels/da over the forecast period, accounting for more than one-third of the projected 3.2 mb/d global gains,” it said.
The report further said that India’s additional demand will be more diversely spread across product categories than in other major economies. Only 18% of the country’s demand growth will be for petrochemical feedstock use while globally it would be more than 90%, and in China virtually all net gains will be for chemical production.
