India has to increase its petrochemical manufacturing capacity within a limited timeframe to address growing domestic and international demand and offset dependence on China's increasing dominance of the sector, a top Reliance Industries official said on Friday.
Addressing a petrochemical industry conference, Vikram Sampat, director of Strategy and Business Development for the polyester business at Reliance Industries, cautioned that China is gradually dominating the world petrochemical market. "If we don't do it, China will keep growing," he urged Indian refiners to invest more money into the business.
Sampat further said that Reliance's petrochemical intensity today stands at about 20%, i.e., the share of petrochemical production in its overall refining capacity. But with China quickly increasing its production and adding to global oversupply, petrochemical margins everywhere in the world are facing a squeeze.
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India's petrochemicals consumption, while still below world levels, will soar as the country's economy grows, and provide a powerful reason for increasing local production. Indian refiners are being counselled by insiders in the industry to concentrate increasingly on the production of petrochemicals as demand for traditional carriage fuels such as petrol and diesel will tend to level off.
Sampat highlighted this new trend by observing that as demand for petrol is greatest, refiners will shift 30%–50% of their production of gasoline into petrochemical manufacture. As demand for diesel is greatest, the diversion can be taken even further to 50%–70%.
Such a shift is able to enable India to serve its domestic requirements and become a greater player in the world supply chain, reducing exposure to Chinese market control. As the trend towards clean energy picks up pace, petrochemicals are becoming a primary growth driver for Indian refiners.
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