New Delhi, Dec 29: India’s petrochemical consumption is projected to grow robustly at 6-7% per annum in the medium term, driven by economic expansion and demand for downstream products, as highlighted in a CareEdge Ratings report.
There is a strategic aim to reduce import reliance, prompting both public and private sectors to aggressively expand petrochemical capacity. Particularly, polypropylene capacity is expected to increase 1.8 times from FY25 to FY30, outpacing anticipated demand growth of 1.4 times, potentially eliminating import dependence by FY30.
However, the profitability of domestic petrochemical players will hinge on improving cost competitiveness amidst weak prices and spreads due to global oversupply.
A slight recovery in spreads was noted in the first half of FY26, allowing for an expected 200 basis points improvement in EBITDA margins. Sustained profitability will depend on competitive pricing, the global demand-supply situation, and government support in light of significant global capacity additions, especially from China, which have adversely affected Indian manufacturers for several years.
The report also mentions healthy growth in the consumption of major petrochemicals in India, including polymers like polypropylene, polyethylene variants, PVC, and others. Despite this growth, domestic capacity additions have lagged, resulting in increased reliance on imports.
The global petrochemical landscape has seen substantial capacity expansions, dominated by China, leading to a mismatch in demand and supply, thereby pressuring product spreads and operational profitability in the Indian sector over the last three years up to FY25.
