India will be a bright spot for petrochemical demand in 2025 even as global consumption lags supply, amid rising demand for electric vehicle parts, solar panels and household appliances, industry executives said on the sidelines of India Energy Week conference.

“We are seeing good local demand in the sectors like propylene where our company operates,” Bharat Petroleum’s BPCL director of refineries Sanjay Khanna said.

Indian Oil IOC Chairman A S Sahney said demand is expected to remain resilient this year.
Petrochemicals are used in key building blocks for a variety of goods such as plastics, paints, and pharmaceuticals.

Ganesh Gopalakrishnan, TotalEnergies’s TTE global head of petrochemical trading, said there is good demand from the automobile sector while white goods consumption is recovering.

However, global petrochemical margins are expected to stay depressed for a few more years amid weak demand from top petrochemical consumer China and excess supply from new Chinese and Middle Eastern plants.

“The industry is waiting for China to announce its big incentive plan in March,” said TotalEnergies’s Gopalakrishnan, adding that this could spur China’s demand and improve global petrochemical margins.

Refiners in India have been insulated from losses because they produce their own petrochemical feedstock naphtha, margins have been negative in the last 3-4 years for standalone plants which rely on imported feed, said Pankaj Srivastava, an analyst at consultancy Rystad Energy.

Meanwhile, investments continue to pour into India. The country is expected to receive $87 billion worth of investments in the next decade to meet the nation’s rising demand for petrochemicals, the country’s oil minister Hardeep Singh Puri said last year.

He said India consumes 25 to 30 million metric tons of petrochemical products annually, and the chemical and petrochemicals sector, currently valued at $220 billion, is expected to grow to $300 billion by 2025.

Companies such as Nayara Energy and Haldia Petrochemicals have already announced plans to boost production.

Petronet LNG is setting up a petrochemical complex of 750,000 metric tons-per-year (tpy) propane dehydrogenation unit and 500,000 tpy polypropylene unit in the western state of Gujarat.

“The downturn in petchems has always been cyclical and we hope margins will recover in next three years,” Petronet LNG Chief Executive Akshay Kumar Singh said.

Source: Reuters