Naphtha feedstock determines polymer choice

IN FOCUS / POLYMERS

The demand for polypropylene (PP) would outstrip demand for polyethylene (PE) in India but globally, PE would outsell PP in the next decade.

According to an estimate by the central government, PP demand growth will be at 13-15 per cent while PE demand growth would be 10-12 per cent.

Globally the demand for PE would be higher than PP owing to higher prices of the latter.

Internationally, supply of ethylene was expected to surpass that of propylene leading to high prices of the latter. Most of the new expansion in petrochemicals would take place in west Asia.

However, these plants will have gas-based crackers. These were unsuitable to produce significant quantities of propylene.

"There will few additional capacities in petrochemicals using naphtha as feedstock. We expect naphtha based crackers will become regionalised going forward. There will be supply constraint globally in propylene and consequently in PP. This will push PP prices higher than PE internationally," industry experts said.

However, the situation will be different in India with abundant supply naphtha from domestic refineries.

Moreover, there was a scarcity of natural gas in the Indian market at present. The proposed significant capacity additions were also likely to be naphtha based as far as Indian plants were concerned.

For instance, Indian Oil Corporation (IOC) was planning to set up a petrochemical complex at Paradip in Orissa using feedstock from its proposed 12 million tonne refinery at the same location.

At present, PP production in India was about 1,730KT while production of PE was 1,550 KT. PP prices were generally higher than PE prices by $50-100 per tonne depending upon specific grades.

The market for PP was yet to be developed completely and as a result large quantities of PP were being exported by major players.

Reliance was the largest player in basic petrochemicals followed by Haldia Petrochemicals Ltd, IPCL and GAIL.

"PP has some core applications in which cannot be replaced by HDPE. For instance, PP can not be replaced in most of the applications in white goods and automobile industries. PP is being used in sustainable and value added items. The swing from PP to PE will only take place in low grade items if the price differential between two goes up substantially," they pointed out.

PE was mainly used for carry bags, basic or low-quality moulding material, bottles and cans for edible oil and certain types of crates.

PP was currently being used for crates which were exposed to vagaries of weather, like those used to transport soft drinks, besides being used to produce automobile components, white goods, woven sacks for hot filled cement etc.