Polyethylene (PE)

LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Blue flake prices rise at the low end in eastern Europe Wide range of views on eastern Europe bale prices Mixed coloured flake demand remains poor September price talks getting underway

23-Aug-2024

HOUSTON (ICIS)–In light of the recent surge of ocean freight rates, US plastic scrap trade has slowed some to overseas destinations, but still remains robust within North American borders. Albeit lower this quarter, polyethylene terephthalate (PET) plastic scrap in particular continues to be strong in import and export volumes amid a moderate domestic market. US remains a net importer of plastic scrap US PET scrap imported decreased 11% Q2 2024 vs Q1 2024 US PET scrap exported increased 62% Q2 2024 vs Q2 2023 IMPORTS SLOW ON GLOBAL FREIGHT, PET REMAINS STRONG Q2 2024 trade data from the US Census Bureau shows US imports of plastic scrap – noted by the HS code 3915 – have fallen 10% quarter on quarter, but still having increased 7% year on year when comparing with Q2 2023. Plastic scrap imports include items such as used bottles, but also other forms of recycled feedstock such as purge, leftover pairings and now also flake material. Imports totaled 114,969 tonnes in Q2 with drops seen across the major polymer groups for US scrap import. Polyethylene (PE) scrap was down 13%, while polyethylene terephthalate (PET) scrap was down 11% quarter on quarter. Based on volume alone, the drop in PET imports by 6,857 tonnes is the largest contributing factor to the overall decrease. While imports from Canada and Mexico still dominate total volumes, when looking at PET specifically, imports from Mexico have dropped off significantly. Top sending countries for PET scrap are Canada, followed by Thailand, Ecuador, Japan, Indonesia and Honduras as of the 1H2024 data. This means less than 25% of US PET scrap imports came from North America, while over 43% of PET imports originated from Asian countries, a reversal of the statistics seen just two years prior. While down quarter on quarter, PET scrap imports are still elevated in comparison to previous years, up as much as 24% year on year. As of Q2 2024, PET makes up 50% of all US imported plastic scrap, followed by the "other" plastic scrap category at 29% and PE scrap at 13%. US recycled polyethylene terephthalate (R-PET) market participants confirm they have seen a notable rise in imported R-PET activity from Asia and Latin America, particularly due to their cost-competitive position when it comes to feedstock, labor and facility costs. Though towards the back half of Q2, ocean freight rates did substantially rise, likely curtailing the window of cost competitiveness for many. Typically, imports from these overseas locations must be ordered weeks, if not months, in advance, and so Q2 import volumes largely represent demand from one to two months prior. Even with higher ocean freight rates today, US converters and recyclers continue to buy imported flake and pellet to supplement operations, as it remains cost-competitive in most cases. R-PET demand on the East Coast has continued to strengthen during the summer months and is now looking solid through the end of the year, a deviation from the typical seasonal demand pattern. Though imports come with additional transportation and cost risk, players accept that international supply is now woven into the fabric of the market, much like with virgin PET. PET EXPORTS SURGING, OTHER PLASTICS SEE WEAK GLOBAL MARKETS Despite the desire for a growing domestic recycled plastics market, feedstock material continues to bleed out of the country, specifically PET bales. US exports of plastic scrap have increased 5% quarter on quarter to a total of 112,385 tonnes, while PET scrap exports have increased 18% quarter on quarter, and a whopping 62% year on year. Though the US has always exported a portion of domestic bale material to other countries, including Mexico and some in Asia,  exports to Mexico have surged in the last 10 months. This growing trade relationship is largely attributed to new capacity in Mexico, paired with strong local demand which has elevated local bale prices. As a result, Mexican recyclers have been purchasing US PET bales as a lower cost option with high availability. Overall, exports of other types of plastic scrap continue to slow, following the Chinese National Sword and Basel Convention adoption several years ago. PE continues to be a leading polymer type for US plastic scrap exports, coming in at 33,556 tonnes in Q2 2024. According to 1H24 total PE imports, India is the largest destination at 25%, followed by Indonesia at 15% Canada at 14%, and Malaysia and Vietnam tied at 13%. As of this past quarter, the US remains a net importer of plastic scrap.

22-Aug-2024

MUMBAI (ICIS)–India’s state-owned Bharat Petroleum Corp Ltd (BPCL) plans to invest rupee (Rs) 1.7 trillion ($20.3 billion) over the next five years to grow its refining and fuel marketing business, as well as expand its petrochemicals and green energy businesses. 44% of total earmarked for refinery, petrochemical capacity growth Bina refinery/petrochemical project due for commissioning in FY2028-29 New refinery project being mulled As part of the investment initiative named ‘Project Aspire’, some Rs750 billion will go to increasing capacity at BPCL’s refineries and expand its petrochemical portfolio, company chairman G Krishnakumar said in the company’s annual report for the fiscal year ending March 2024. “The demand for major petrochemical products is expected to rise by 7-8% annually. This presents a strategic opportunity to expand refining capacity alongside the development of integrated petrochemical complexes,” Krishnakumar said. BPCL’s planned petrochemical expansions include the new petrochemical projects at its Bina refinery in the central Madhya Pradesh state, and the Kochi refinery in the southern Kerala state. The Bina project is a brownfield expansion that will raise the refinery’s capacity by 41% to 11m tonnes/year, to cater to the requirements of upcoming petrochemical plants, which include a 1.2m tonnes/year ethylene cracker and downstream units. The site is expected to produce 1.15m tonnes/year of polyethylene (PE), including high density PE (HDPE) and linear low density PE (LLDPE); 550,000 tonnes/year of polypropylene (PP); and 50,000 tonnes/year of butene-1 The complex will also produce chemicals such as benzene, toluene, xylene, the annual report said. “Technology licensors for all critical packages, and project management consultants for refinery expansion and downstream units have been onboarded and work at the site commenced in the first week of July 2024,” Krishnakumar said. BPCL has chosen US-based Lummus to provide technologies for the new ethylene plant and downstream units at the complex. The refinery will be ready for commissioning by May 2028, while petrochemical operations will begin in the financial year ending March 2029. At Kochi, BPCL’s 400,000 tonne/year PP project is progressing as per schedule and is on track for commissioning in October 2027. It plans to raise its Kochi refinery capacity by 16% over the next five years to 18m tonnes/year, based on data from the company’s latest annual report. https://subscriber.icis.com/news/petchem/news-article-00110958286 The company also plans to set up additional petrochemical capacities over the next few years. “To meet the anticipated demand beyond our planned expansions in Bina and Kochi, we are actively evaluating options for setting up additional integrated refining and petrochemical capacities within the next 5-7 years,” Krishnakumar said BPCL has begun evaluating options to set up a new refinery with a planned capacity of around 9 million to 12 million tonnes/year, a company official said, adding, “we are exploring a new refinery either on the east coast or at other locations”. In Mumbai, the company also plans to expand its refinery capacity by a third to 16m tonnes/year in the next five years, according to its annual report. In the eastern Odisha state, BPCL expects to begin operations at its 200 kilolitre/day ethanol plant at Bargarh by October 2024. Once operational, the integrated refinery is expected to produce both first generation (1G) as well as second generation (2G) ethanol using rice grain and paddy straw as feedstock. Focus article by Priya Jestin ($1 = Rs83.85) Thumbnail image: The Bharat Petroleum import terminal at Haldia in West Bengal on 13 March 2021. (Debajyoti Chakraborty/NurPhoto/Shutterstock)

20-Aug-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. STILL WAITING FOR the end of the chemicals downturn? If so, I believe you are wasting precious time. Read in detail in today’s blog and see my ten summarised reasons below. Print this off and pin it on your boardroom wall: Most of the G20 countries, which account for more than 70% of global polyethylene demand (chemicals and polymers are equivalent to economic activity) is ageing. Immigration is of course the answer to some extent, but this is politically very difficult in the West. In the regions and countries where populations are youthful, not enough people – because of politics in the West – are likely to be able to move to the rich world for better economic opportunities, and to escape conflicts and the effects of climate change. Climate change will more likely be successfully mitigated in the rich world. But the risk is that the Developing World ex-China does not get the financing and technologies it needs to mitigate the impact of climate change. China is the immediate centre of the crisis for the global chemicals industry because global capacity was added on wrong growth assumptions. China’s chemicals demand growth could turn negative because of an ageing population, the end of the real-estate bubble and geopolitics. Geopolitics mean that we are likely to see a change in chemicals trade flows. A bipolar world – one centred on China and its allies and the other on the US and its allies – is one outcome The oil and gas majors could end up dominating chemicals to compensate for declining oil demand due to electric vehicles and fuel efficiency, as China moves to chemicals self-sufficiency by itself and/or with imports largely from its geopolitical partners in the Middle East We are in the early stages of a new industrial revolution driven by sustainability As was the case with the start of the first industrial revolution, it is impossible to say what will be the winning and losing technologies. For chemical companies without strong feedstock advantages, without the right geopolitical locations- and which have too much exposure to the diminishing China import markets – it is success in sustainability that is the route to new competitive advantage. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

19-Aug-2024

LONDON (ICIS)–Senior editor for recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including: Growing number of enquiries for food-grade pellets in August Actual confirmed deals remain limited Buyers take various approaches to pellet purchasing Wider R-PET market stable due to holidays

16-Aug-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. The world as it stands today tells us that US doing extremely well in the key China HDPE import market. Using trade data and ICIS price benchmarks: In 2023 over 2022, US sales turnover in soared by $500m as its exports in tonnes to China also increased. In January-June 2024 over the same period last year, its turnover was up by another $106m. Meanwhile in 2023 over 2022 as their shipments to China dipped – and because of lower pricing – Iran’s turnover was down by $468m, Saudi Arabia by $449m, the UAE by $412m and South Korea by $176m. But the January-June 2024 data show the UAE and South Korea clawing back some ground. “In H1 2024, US [total] PE exports were 46.5% of total sales and operating rates above 90% – a far cry from 21% in 2017 when operating rates were also much lower in the mid-80% range,” wrote my colleague Joe Chang in a15 August ICIS news article. This suggests that the US, because of its feedstock advantages, gained sales turnover in markets other than just China in H1 2024 – and in the other grades of PE. The comprehensive nature of ICIS price benchmark and trade data means that it is possible to produce charts like the ones in today’s post for other countries and regions such as Europe, Latin America, Africa, Turkey and India. But this familiar world of trade flows driven by feedstock costs is rapidly changing. If the US-China geopolitical split continues, this raises the question of where China will in future source most of its chemicals import volumes. Demographics will also shape demand, and so trade flows, in China and elsewhere. A later blog post will discuss demographic analysis which suggests that China’s population in 2020 could have been 130-250m lower than the 1.42bn official number.  This would obviously have major implications for historic and future chemicals demand in China. But perhaps China’s cap on refinery capacity from 2028 onwards, due to the electrification of vehicles, will limit its capacity growth, thereby creating a bigger opportunity for exporters. Geopolitics, demographics, debts and sustainability will, I believe, be the new defining shapers of chemicals and polymers trade flows. The world as it stands today, represented by most of the analysis in today’s post, is coming to an end. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

16-Aug-2024

HOUSTON (ICIS)–Prices for ethane, the predominant US feedstock used to make ethylene, have fallen this month to levels not seen since the pandemic, and they will likely remain depressed until colder weather arrives later in the year. Since falling below 12 cents/gal, ethane prices have risen by a few cents as some crackers have restarted. If another hurricane disrupts US exports of LNG, ethane prices could decline further with domestic natural gas prices. US ethane supplies should continue growing because of rising oil production. INEXPENSIVE ETHANE SUPPORTS ELEVATED PE MARGINSAt the least, low ethane costs will help US polyethylene (PE) producers maintain operating rates at profitable levels regardless of the strength of demand. US ethylene producers enjoy a cost advantage because they predominantly rely on ethane as a feedstock, and its price tends to rise and fall with that for natural gas. Much of the world relies on oil-based naphtha, which is usually more expensive. From a purely cost perspective, lower ethane costs allowed for integrated PE margins to increase in July, and margins may rise again in August on further reductions in integrated costs, said Harrison Jacoby, director of PE for ICIS. Because of the cost advantage of US producers, they have been able to maintain exports despite the global glut of PE. Recently, PE exports from the US need to make up 45% of total sales for domestic producers to maintain operating rates of 90%, as domestic demand has been essentially flat for many years,  Jacoby said. Inexpensive feedstock allows them to be competitive in virtually every market globally, supporting high operating rates. ANOTHER HURRICANE COULD LOWER ETHANE PRICESOne of the reasons why ethane prices fell so sharply is because Freeport LNG Development shut down its LNG operations in Freeport, Texas, because of Hurricane Beryl. The site is a key LNG export terminal in the US, and the shutdown of its operations back up natural gas supply, which depressed prices for domestic natural gas and ethane. The same scenario could repeat itself if another hurricane shuts down one of the LNG terminals on the coasts of Texas or Louisiana. Hurricane season does not peak until later in August and September, and meteorologists are expecting an active year. If a hurricane shuts down a cracker, that would reduce ethane demand, further depressing prices. WEST TEXAS GAS PRICES HOVER AROUND ZEROAnother factor depressing ethane prices is excess natural gas at the Waha hub in west Texas. The oil wells in west Texas also produce a lot of natural gas, and their output can overwhelm the pipeline capacity to ship it out of the region. Because of insufficient pipeline capacity, gas prices at the Waha hub have frequently fallen below zero. Ethane is extracted from raw natural gas. If any ethane remains in the gas stream, it is sold as fuel. If that happens at Waha, then producers would be paying a counterparty to market their supply. To avoid this, companies have been extracting as much ethane as possible. Ethane extraction also frees up space in the pipelines in west Texas, allowing them to take away more natural gas out of the region. ETHANE PRICES MAY RISE LATER IN THE YEARWaha prices will likely continue to hover around zero until the new Matterhorn Express pipeline starts up later this year. The Matterhorn pipeline will allow more natural gas to be shipped out of west Texas. This will allow gas prices at Waha to climb, which boosts ethane’s value to fuel in the region, a factor that could raise prices. As the year progresses, colder temperatures should increase demand for natural gas. That should raise gas prices, which would also push ethane prices higher. The ICIS forecast for ethane reflects this. It shows ethane prices rising as the year progresses. NEW PIPELINE TO TAKE AWAY MORE GAS FROM PERMIANThe midstream industry is already planning another pipeline to take away additional natural gas out of the west Texas. Targa, WhiteWater, MPLX and Enbridge have made a final investment decision (FID) to build the Blackcomb Pipeline, which will ship up to 2.5 billion cubic feet/day of natural gas from the Permian Basin in west Texas to the Agua Dulce area in south Texas. Operations should start in the second half of 2026. NEW MIDSTREAM PROJECTS TO RAISE ETHANE SUPPLIESThe new Blackcomb pipeline is the latest new project announced by midstream companies. They are continuing to build new natural gas processing plants. These plants remove impurities and natural gas liquids (NGLs) from raw natural gas. The processed gas is then ready to be burned as fuel or exported as LNG. The NGLs are sent to fractionators, which separate the individual components into purity products like ethane and propane. The following table shows fractionators that were started up or that are being developed. Company Project Type Capacity Units Location Startup Energy Transfer Frac IX Fractionator 165,000 bbl/day Mont Belvieu Q4 26 Enterprise Fractionator 14 Fractionator 195,000 bbl/day Mont Belvieu H2 2025 Gulf Coast Fractionators JV * GCF Fractionator Fractionator 135,000 bbl/day Mont Belvieu Q3 24 ONEOK MB-6 Fractionator Fractionator 125,000 bbl/day Mont Belvieu year end 24 Targa Train 9 Fractionator Fractionator 120,000 bbl/day Mont Belvieu in service Targa Train 10 Fractionator Fractionator 120,000 bbl/day Mont Belvieu Q1 25 Targa Train 11 Fractionator Fractionator 150,000 bbl/day Mont Belvieu Q3 26 * GCF is restarting after being idled in January 2021. The JV is made up of Targa, Phillips 66 and Devon Energy Source: corporate announcements The following table shows natural gas processing plants that were started up or that are being development. Company Project Type Capacity Units Location Startup Delek not available Gas Plant 110 million cubic feet/day Delaware H1 2025 Durango Midstream Kings Landing, Phase I Gas Plant 200 million cubic feet/day Eddy County, NM Q4 24 Durango Midstream Kings Landing, Phase II Gas Plant 200 million cubic feet/day Eddy County, NM not available Energy Transfer Badger Gas Plant 200 million cubic feet/day Delaware mid 25 Energy Transfer Permian processing expansions* Gas Plant 200 million cubic feet/day Permian Q4 24 to Q1 25 Enterprise Orion Gas Plant 300 million cubic feet/day Midland H2 25 Enterprise Mentone West Gas Plant 300 million cubic feet/day Delaware H2 25 Enterprise Mentone West 2 Gas Plant 300 million cubic feet/day Delaware H1 26 Enterprise Mentone 3 Gas Plant 300 million cubic feet/day Delaware in service Enterprise Leonidas Gas Plant 300 million cubic feet/day Midland In service MPLX Preakness II Gas Plant 200 million cubic feet/day Delaware in service MPLX Secretariat Gas Plant 200 million cubic feet/day Delaware H2 25 MPLX Harmon Creek II Gas Plant 200 million cubic feet/day Marcellus in service Targa Greenwood Gas Plant 275 million cubic feet/day Midland Q4 23 Targa Greenwood II Gas Plant 275 million cubic feet/day Midland Q4 24 Targa Wildcat II Gas Plant 275 million cubic feet/day Delaware Q2 24 Targa Roadrunner II Gas Plant 230 million cubic feet/day Delaware in service Targa Bull Moose Gas Plant 275 million cubic feet/day Delaware Q2 25 Targa Pembrook II Gas Plant 275 million cubic feet/day Midland Q4 25 Targa Bull Moose II Gas Plant 275 million cubic feet/day Delaware Q1 26 Targa East Pembrook Gas Plant 275 million cubic feet/day Midland Q3 26 * GCF is restarting after being idled in January 2021. The JV is made up of Targa, Phillips 66 and Devon Energy Source: corporate announcements Insight article by Al Greenwood Thumbnail shows PE pellets, which are made with ethylene. Image by ICIS

15-Aug-2024

HOUSTON (ICIS)–Weak growth in the world's population will slow economic growth, tighten labor markets and likely prolong the global glut in polyolefins, according to ICIS analysts. For polyethylene (PE), around 135 billion lb (61 million tonnes) of additional PE capacity should start up from 2019-2028, versus demand growth of 87 billion lb during the same period, said Harrison Jacoby, ICIS director of PE. He made his comments at ICIS networking briefings in Houston and New York. The typical world-class PE plant produces 1 billion lb/year, Jacoby said. That represents an excess of 48 PE plants. The demand gap is similarly stark for polypropylene (PP). About 50 million tonnes of additional PP capacity should start up from 2019-2028, versus demand growth of 30 million tonnes, said Ramesh Iyer, director of polymers Americas at ICIS. The typical global scale plant produces 1 billion lb/year, he said. That represents an excess of about 45 global plants. IT COULD TAKE YEARS TO GROW OUT OF THE GLUTWithout plant shutdowns, it could take several years for the world to grow out of its current supply glut. Demographers expect the world's population will peak sooner and at a lower level than estimates from five to 10 years ago, said Kevin Swift, ICIS senior economist for global chemicals. In about 20 countries, populations are declining, he said. Some countries in Latin America are tracking the demographic trends of Europe at a lag. In China, the biggest market for PE and PP, weak demographics are compounding the effects of youth unemployment, low consumer confidence and the bust in the property market, Swift said. He expects actual economic growth in China to be stagnant. Other economists typically subtract three to five points from official Chinese GDP statistics "The economy is growing slowly, if it all," he said. In the US, Swift warned that labor markets will likely remain tight because of slower population growth. He noted that for every two Baby Boomer workers who are retiring, one member of the Generation Z cohort will join the labor market. Population growth will be concentrated in countries in the Africa, the Middle East and southeast Asia regions, Swift said. LOWER INFLATION RAISES PROSPECTS OF RATE CUTSIn the US, Swift noted some signs of improvement. One measure of inflation, the producer price index (PPI), came in below expectations. Another measure, the consumer price index (CPI) came in at expectations. Both readings greatly increase the likelihood that the Federal Reserve will start lowering its benchmark interest rate at its next meeting in mid-September. The expectations of a rate cut have already started to lower mortgage rates on home loans, which should boost sales by making housing more affordable. Ultimately, that will trickle down to demand for plastics and chemicals used in house construction and in home furniture and appliances. Longer term, members of the millennial demographic cohort are reaching their prime age to buy homes, Swift said. That, combined with lower rates, should provide a tremendous tailwind for the housing market for the rest of the decade before reversing itself. LIKELY PLANT SHUTDOWNSAny growth in the US will not alleviate what will likely be the need to rationalize polyolefin capacity. The magnitude of the global supply glut is too large. Some producers have already started to rationalize higher cost PE and PP capacity, and Jacoby and Iyer expect the trend to continue. In the US, PE plants will remain competitive because of their feedstock advantage, Jacoby said. Focus article by Al Greenwood Thumbnail shows the construction of a chemical plant.

14-Aug-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. The ICIS data continue to tell us that we are facing the biggest shake-up in the modern history of the petrochemicals industry. Let’s today use high-density polyethylene (HDPE) China accounted for just 6% of global HDPE demand in 1992 although it had a 22% share of the global population. By the end of 2024, we expect China to generate 33% of global demand from an 18% share of the population. For far too long, our industry overlooked the warning signs: China’s rapidly ageing population, its real estate bubble and the geopolitical split with the West. It was only a question of when rather than whether the Chinese economy would enter a more challenging phase. We can see from the ICIS data on spreads and margins that the “when” arrived in late 2021 – the Evergrande Moment. CFR China HDPE injection grade price spreads over CFR Japan naphtha costs have averaged just $212/tonne since the end of Petrochemicals Supercycle – from January 2022 onwards. This compares with the $487/tonne average during the Supercycle – 1992 until 2021. So, spreads need to rebound by 130% to get back to where they were during the Supercycle. This year, as we can see from the chart in today’s post, they have fallen to a new record low. Global capacity was added largely on the assumption that China’s HDPE demand growth would be higher than is going to be the case. My highly unscientific “wisdom of crowds” approach, which involved talking to lots of people, suggests that the consensus view was that China’s petrochemicals demand growth in general would be at 6-8% over the long term. Low single digit growth now seems more likely. Global HDPE operating rates were very healthy during the Petrochemicals Supercycle. Including two years after the end of the Supercycle (the 1992-2023 period), we estimate they averaged 88%. We forecast a global operating rate of just 75% in 2024-2030. Global capacity would have to grow by just 173,000 tonnes a year versus our base case assumption of 2.6m tonnes a year if 2024-2030 were instead to reach 88%. Rationalisation of capacity in disadvantaged regions such as Europe and Asia ex-China seems likely as China, the Middle East and the US carry on building. So much for what we know. What about the “unknown unknowns”? Here are just two of them: What will be the size of China’s population by the end of the century and therefore its HDPE and other resins demand? Estimates range from 633m to 525m or even less. Can China fully maintain its role as the Workshop of the World? Or will reshoring and trade tensions eventually lead to a major decline in Chinese exports? Facts, or rather data, are sacred. So should be rigorous scenario planning as “one size fits all” views of the future won’t get us anywhere. Neither will a repeat of the conventional thinking that got us into this mess in the first place. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

14-Aug-2024

MUMBAI (ICIS)–Indian Oil Corp (IOC) plans to beef up its petrochemical production capacity to 14m tonnes/year by 2030 which will increase the state-owned company’s petrochemical intensity index (PII) to 15%, nearly triple its current level, company chair SM Vaidya said. Total petrochemical investments to reach Rs1.2 trillion Domestic industry projected to grow at 8-10% over the next few years Local demand estimated to hit $1 trillion by 2040 Petrochemical projects worth Indian rupees (Rs) 300 billion ($3.6 billion) are under various stages of implementation, while feasibility studies are ongoing on projects worth Rs900 billion, based on IOC’s annual report for the fiscal year ending March 2024. The company’s current petrochemical production capacity stands at 4.28 million tonnes/year, based on its annual report for the fiscal year ending March 2024. IOC’s PII refers to the percentage of crude oil that is directly converted into chemicals. “We are integrating petrochemicals into our refining operations," IOC chairman SM Vaidya said at the company’s annual general meeting on 9 August. "This oil-to-chemical approach will enrich our value chain, meet rising petrochemical demand, reduce import reliance, and insulate the bottom line from the impacts of oil price fluctuations," he said. By 2026, its refining capacity will have increased by more than 25% from the current 70.3 million tonnes/year to 87.9 million tonnes/year, Vaidya said at  IOC’s annual general meeting on 9 August. By the end of the decade, IOC expects its refining capacity to be 107.4 million tonnes/year, according to the annual report released on 18 July. “In 2023-24, we successfully commissioned the first phase of naphtha cracker expansion and paraxylene-purified terephthalic acid (PX-PTA) revamp project in Panipat and an ethylene glycol plant at Paradip. These have propelled our PII to 6.1%,” Vaidya said. In November 2023, IOC increased the capacity at the naphtha cracker at its Panipat refinery complex from 857,000 tonnes/year to 947,000 tonnes/year. Following the PX-PTA revamp at its Panipat refinery, IOC has increased its PX production to 460,000 tonnes/year and PTA output to 700,000 tonnes/year, as per the company website. In March 2024, the company inaugurated its 357,000 tonne/year monoethylene glycol (MEG) project at its Paradip refinery complex. PETROCHEMICAL PROJECT PIPELINE Indian Oil plans to commission a 150,000 tonne/year butyl acrylate plant at its Gujarat refinery in the current financial year 2024-25. One of the company’s ambitious petrochemical projects include the mega complex at Paradip in eastern Odisha state, Vaidya said, noting that the Rs610 billion project is IOC’s “largest ever investment at a single location”. The petrochemical complex will include a world-scale 1.5 milion tonne/year naphtha cracker unit along with downstream process units for producing polypropylene (PP), high density polyethylene (HDPE), linear low-density polyethylene (LLDPE) and polyvinyl chloride (PVC). The Paradip petrochemical project is currently in implementation stage and the company expects to commission it by August 2029, IOC said in its annual report released on 18 July. As part of its future expansions, IOC expects to begin operations at the 200,000 tonne/year PP plant at its Barauni refinery and 500,000 tonne/year PP line at its Gujarat refinery before end-March 2026, based on the company’s annual report. IOC has also enhanced its lube oil base stocks (LOBS) capacity at its Haldia complex and is setting up new plants at its Gujarat and Panipat refineries, Vaidya said, adding, “we aim to increase the capacity from 730,000 tonnes/year to 1.5 million tonnes/year”. The company expects to commission the 60,000 tonnes/year polybutadiene rubber (PBR) plant at its Panipat refinery by March 2025 as per the annual report. These planned expansions by IOC will help meet the rising petrochemical demand in the country, IOC stated in its latest annual report. The domestic petrochemical industry is "poised for substantial growth, driven by India’s sturdy macro fundamentals, population expansion and presently low per capita polymer consumption," it said. India's overall petrochemical demand is projected to nearly triple by 2040, with the industry's value expected to reach the $1 trillion mark, said Indian minister for petroleum and natural gas Hardeep Singh Pur in a presentation at the Asia Petrochemical Industry Conference (APIC) in May 2023. Focus article by Priya Jestin ($1 = Rs83.91) Thumbnail image: An Indian Oil petrol pump in Kolkata, 17 January 2022. (By Indranil Aditya/NurPhoto/Shutterstock)

14-Aug-2024