MUMBAI (ICIS)–Petrochemical players in India
are cautiously optimistic that the industry is
on track for a gradual recovery even as the
south Asian country is still in the throes of a
deadly second COVID-19 wave.
Plastic exports in the current fiscal year
ending March 2022 are projected to post a 20%
growth to $12bn, on the back of improving
demand from the US, Europe and other countries,
said Sribash Dasmohapatra, executive director
at India’s Plastics Export Promotion Council
“In May 2021, India exported plastics worth
$1.13bn, a rise of 33% over May last year.
Government support will help us boost the
exports further,” he said.
Higher prices and reduced availability of raw
material, increasing shipping freight,
container shortage, among others, however,
could derail the growth in exports, he said.
“The demand for chemicals is gradually
returning and expected to reach the pre-Covid
levels during the current fiscal year,” Tata
Chemicals chairman N Chandrasekaran had said at
the company’s annual general meeting on 2 July.
Most companies expect to improve output in the
next six to 12 months, according to a joint
survey conducted by industry body Federation of
Indian Chambers of Commerce & Industry
(FICCI) and Dhruva Advisors in June this year.
Nearly 63% of the surveyed companies foresee
utilisation rates to be at above 70% in the
next two to four quarters.
“Demand for chemicals was tough in 2020, but
the recovery is mostly back. This is expected
to continue all through the year, gradually,
and the demand level for many chemicals is
likely to reach the pre-pandemic levels,”
Chandrasekaran of Tata Chemicals said.
Overall production in India in the last quarter
of fiscal year 2020-21 (January-March) has
increased across the board, but this was before
the second wave of COVID-19 hit and renewed
lockdowns of varying degrees were imposed at
Indian government allowed industrial operations
to continue in the second phase and did not put
a total stop to factories.
Some states like Uttar Pradesh, Delhi, Madhya
Pradesh, and Gujarat have recently eased the
restrictions greatly, while the lockdowns in
Himachal Pradesh, Telangana and Karnataka have
In some states, lockdowns were extended – up to
10 July for Manipur and Punjab; up to 12 July
for Haryana, Tamil Nadu and Goa; and up to 16
July for Odisha.
Jharkhand and Nagaland have eased restrictions
but have not completed lifted lockdowns.
In Kerala and Maharashtra – the worst affected
states – lockdowns were reimposed amid
continued spikes in COVID-19 cases.
Still, new projects under implementation and
improving capacity utilization at existing
plants should boost industrial production in
the current fiscal year.
State-run firms like Indian Oil Corp (IOC) have
announced capacity addition plans in
petrochemicals at various locations, while
several gas-based urea projects are under
implementation across India – many of which
will be commissioned in the current fiscal
One of the reasons for improving capacity
utilisation is import substitution, said a
source at Deepak Nitrite.
“Commodity prices are going up and sea freight
rates are also going up. In such a situation,
it is extremely difficult for people to import
and sell in India,” he said.
Erratic global supply of chemicals had also
helped in increasing import substitution, he
Despite the severity of the second COVID-19
wave, Deepak Nitrite continued to operate at
high rates in all its facilities, the company
source said, citing improved demand at its
“This was achieved despite a significant
increase in raw materials almost across the
board as the company was able to pass on a lot
of the cost,” he said.
Companies that produce packaging films such as
Cosmo Films, Polyplex films, UFlex and SRF Ltd
have all reported strong growth throughout the
last fiscal year on the back of strong demand.
Newer applications in fields like healthcare
could result in a new stream of sustainable
Prices and availability of raw materials like
polypropylene (PP) for the manufacture of
biaxially oriented polypropylene (BOPP) have
been a challenge since the last quarter of
“In the fourth quarter of the last fiscal, raw
material prices of biaxially oriented
polyethylene terephthalate (BOPET) rose 30%,
while BOPP raw material prices rose 17%,” said
a source at UFlex.
However, the companies have been able to pass
on the price rise to downstream users, he
Specialty chemicals producers like SRF Ltd,
which registered a robust performance in the
last fiscal year, expect to see a continued
rise in demand especially from overseas
Companies such as Deepak Nitrite and SRF Ltd
have reported an increase in demand from
downstream sectors like agrochemicals and
pharmaceuticals which have helped them increase
“India’s pharmaceutical sector is growing.
Various factors that favor this industry in
India include strong domestic consumption,
rising import substitution and strong growth in
exports,” said the source at Deepak.
Most of these firms have announced plans to
increase their capacity in specialty chemicals
to meet global demand.
Demand for petrochemicals is also expected to
rise from the automobile sector, which is
finally seeing a rise in output.
Commercial vehicles major Ashok Leyland
announced on 4 July that overall market demand
in July is better than the previous month.
“Consequently, our plants will be working for
more days in July compared to May and June,”
Ashok Leyland said in a regulatory filing.
India’s largest carmaker Maruti Suzuki on 5
July said its total production in June 2021 had
more than a threefold increase year on year to
Most auto companies have reported increased
productions in the past two months as Covid-19
cases showed a rapid decline.
“The second wave of the Covid-19 pandemic was
particularly challenging. Even as we see signs
of improvement, we must prepare ourselves well
for the subsequent waves,” FCCI president Uday
Shankar had said.
A third wave with similar or greater intensity
could undo the gains seen in the recent weeks,
After nearly two months of a slowdown in active
Covid-19 numbers, India is now registering an
increase in new cases over the past few days.
India reported 45,892 new cases on 8 July as
opposed to 43,733 the day before, according to
data from the health ministry.
“Variants of concern” have been reported in the
states of Maharashtra, Delhi, Punjab,
Telangana, West Bengal and Gujarat.
The Indian government has also noted the need
to curb the spread of the virus in nine other
states where the numbers have been going up.
The cumulative coronavirus case load in India
as of 8 July stood at 30.7m while the death
toll due to coronavirus in India is now
405,057, as per government data.
Focus article by Priya Jestin
Click here to view the
ICIS Coronavirus, oil price crash – impact on
chemicals topic page.
here to view the Automotive –
impact on chemicals topic
Visit the ICIS
construction topic page for
analysis of the impact on chemical markets and
links to latest news.