Petrochem sector: Time to ‘solve the feedstock conundrum’

The domestic market for petrochemical products is steadily increasing, but the supply side has to be strengthened to reduce dependence on imports materials and susceptibility to supply chain issues, says Vijay Sankar, Deputy Chairman, Sanmar Group.

The Group, which has a strong presence in PVC, caustic soda and specialty chemicals, is in its 50th year of operations and has significant expansion plans.

The demand is there for the taking but the petrochemical sector needs a strong enabling environment for efficient supply of feedstock to downstream industries. The concept of PCPIR (Petroleum Chemicals and Petrochemicals Investment Region) has to be rejuvenated to encourage investments in the sector, he felt.

In Europe and the US, the pipeline infrastructure is so well established, a PVC manufacturer will have “ethylene available on tap”, he said.

A mother industry such as refinery or naphtha cracker unit with public sector participation is a prerequisite given the size and scale of investments. The sector is dominated by public sector oil giants, Vijay Sankar pointed out.

The expertise, skills and financial capability for downstream investments are available but “we need to solve the feedstock conundrum”, he said. In the meantime, the silver lining for the sector is that in the global market the feedstock is available.

The demand for PVC is growing at 1.3 times the GDP and nearly half the PVC requirement is met through imports. Just 15 years back, the domestic market was self-sufficient.

Refineries export nearly 10 million tonnes of naphtha annually, which comes back in the form of end products from China and South-East Asia.

Possibly a closer integration of the Oil Ministry and the Chemical Ministry, which oversees downstream products, will help focus investments in downstream areas, Vijay Sankar felt.

Growing markets He said Sanmar is unique as it has facilities in two of the fastest growing markets, MENA region and India. The PVC capacity in the Egypt unit is being doubled to 400,000 tonnes a year along with facilities for 130,000 tonnes of calcium chloride and 275,000 tonnes of caustic soda. It will be ready by March-April 2018.

The group also hopes to triple its 300,000-tonne suspension PVC capacity in India in the long-term depending on the feedstock situation.

The joint venture with Kem One of France is in the approval stage for a 20,000-tonnes of CPVC annually in Karaikal, Puducherry. Also, in the pipeline is a 18,000-tonne hydrogen peroxide unit at Mettur, Tamil Nadu.