Reliance Industries: Global major BP Plc and its partner Reliance Industries (RIL) have jointly emerged as the winner of a block in the fresh round of auction under the Open Acreage Licensing Policy (OALP). This marks the re-entry of RIL into domestic exploration and production after it stopped bidding for acreages in India.

Indian Oil Corporation, Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) have signed an Agreement on 03 June 2019 for formation of a Joint Venture Company for implementation and subsequent operation of 2757 Km long LPG Pipeline from Kandla, Gujarat to Gorakhpur, UP. Indian Oil, BPCL and HPCL would have 50%, 25% and 25% equity holding in the JV Company.

Indian Oil Corporation (IOC) has lined up investments worth Rs 1,300 crore over the next two years to be made in the state of West Bengal, with a majority of the funds to be used for green initiatives.

HPCL: The reactor erected at the HPCL refinery on recently weighed 1,646 tonnes, making it the heaviest to be erected in a single piece in the Indian oil industry, according to HPCL officials. A huge first stage reactor weighing 1,646 tonnes was successfully erected at HPCL’s facility, marking a milestone in the public sector undertaking’s modernization drive.

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Issue: CPMA/018/2019

June 2019

Monthly Newsletter from

1 | June 2019

Fiscal deficit reaches 52 per cent of the full-year mark in first two months. In just two months, the fiscal deficit — the gap between income and expenditure for the government — has consumed over half of the annual Budget Estimate. However, it is still less than the previous year.

Asian petrochemical makers’ growing use of LPG over naphtha as a feedstock, along with ample LPG supply from the US, will pressure Asia’s naphtha cracks over the coming months.

US oil demand surged 500,000 b/d last year, the biggest increase in more than a decade as the country’s new wave of petrochemical plants soaked up more of its fast-rising, shale-sourced ethane production.

The Asian ethylene-naphtha spread fell to the lowest in almost seven years amid increased supplies of ethylene.

Industry SnippetsMember Companies in the NewsCPMA

India went through one of the biggest democratic processes in the world. People’s mandate for new Govt is finally for re-electing same Govt for the second term with clear majority. This ensures continuity of schemes and stability of policies for the current term which is very much required.

The Budget 2019-20 is also announced. Changes relevant for Petchem industry are import duty changes on few products which are: EDC- 2% to 0%, Naphtha-5% to 4%, Propylene Oxide- 7.5% to 5%, PVC- 7.5% to 10% and Butyl Rubber- 5% to 10%.

The focus of Govt is on “Make in India” and taking the Indian economy to US$ 5.0 Trn by 2024-25. The Indian Economy in 2018-19 was Rs 190.1 Lac crores at current prices and Rs 140.7 Lac Crs at constant prices. At current prices the economy is equivalent US$ 2.71 Trn. It has grown at app 11% in last three years, i.e. at current prices and not adjusted for inflation. In case Indian economy maintains the existing rate of 11% growth in GDP at current prices and Rupee- US$ exchange rates remains stable at

US$ 70, the GDP at current prices in 2024-25 will reach US$ 5.08 Trn. Essential is to maintain the last three years growth rate or surpass it to reach US$ 5.0 Trn.

There are certain areas of concern needed to be addressed. Foremost is growth in manufacturing. The IIP for 2018-19 grew at 3.6% only against 4.4% in 2017-18. Auto sector is under stress. The passenger vehicle (PV) sales declined for a seventh straight month in May to 2, 39,347 units against 3, 01,238 units in the year-ago month. In fact, barring October last year, when sales were up 1.55 per cent, PV offtake has been in the negative in the ten months off the last 11 months. The dip last month is the worst since September 2001, when sales had dropped by 21.91 per cent. All major segments, including two-wheelers and commercial vehicles, witnessed a decline in sales in May, according to data released by the Society of Indian Automobile Manufacturers (SIAM).

Is will be interesting to analyze the reasons behind drop in passenger vehicles sales. Whether it is

liquidity crunch or the more serious lifestyle change of people. With the increasing popularity of App based vehicles like Uber and Ola, many experts had predicted that vehicle ownership in future will decline. This is basically due to driving in traffic congestions and lack of parking space at office and also at home locations. If the drop is due to lifestyle change, it will be difficult to reverse the trend even with Govt intervention. The overall number of passenger vehicle will decline due to this trend as hired vehicle have utilization time of app 60-80% while owned vehicles have utilization time of less than 10% and remain parked at office or at home.

The end result of this lifestyle change and emergence of Electric vehicle is destruction of fuel demand. This megatrend is definitely going to hit the petrochemical industry. Seeing this fuel destruction, refinery majors across the world have started extensive work to reduce fuel output of refineries and increase chemical output. Presently refineries have 15-20% chemical output which will change to 60-80% in times to come. This trend is inevitable.

Commentary for the month

Upcoming Events

2 | June 2019

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CPMA MembersBPCL l Chemplast Cuddalore Vinyls Ltd. l DCM Shriram Ltd. l DCW Ltd. l Engineers India Ltd. l Finolex Industries Ltd. l GAIL (India) Ltd. l Gujarat State Fertilizers & Chemicals Ltd. l Haldia Petrochemicals Ltd. l Hindustan Petroleum Corporation Ltd. l HPCL – Mittal Energy Ltd. l Indian Oil Corporation Ltd. l Indian Synthetic Rubber Private Limited l INEOS Styrolution India Ltd. l LG Polymers (India) Pvt. Ltd. l MCPI Pvt. Ltd. l Mangalore Refinery and Petrochemicals Ltd. l ONGC Mangalore Petrochemicals Ltd. l ONGC Petro Additions Ltd. l Reliance Industries Ltd. l Supreme Petrochem Ltd. l Tamilnadu Petroproducts Ltd.

Associate Members: Braskem SA l HPL Additives Ltd. l ICIS l Indorama Industries Ltd. l Jindal Poly Films Ltd. l SABIC India Pvt Ltd.

CHEMICALS AND PETROCHEMICALS MANUFACTURERS ASSOCIATION708, 7th floor, Kailash Building, 26 Kasturba Gandhi Marg, New Delhi – 110 001. l Telephone: 011-43612198 l Email: cpmai@airtelmail.in

6-9 October 2019 | BERLIN

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Source: MosPI, Platts. March IIP revised to 0.4% from a drop of 0.1

Trade Statistics- Key Products

Sr.

No.

Product

CategoryProduct

2017-18 2018-19 Average monthly Imports

Imports

(KT)

Exports

(KT)

Imports

(KT)

Exports

(KT)

2017-18

(KT)

2018-19

(KT)

%

Change

1 Polymer PVC 1846 20 2047 20 154 171 10.9%

2 Polymer LLDPE+HDPE 1418 435 1179 966 118 98 -16.9%

3 Polymer PP 921 552 855 718 77 71 -7.2%

4 Polymer LDPE 465 108 341 164 39 28 -26.6%

5 Polymer PET 219 1039 335 1082 18 28 52.8%

6 Polymer ABS 98 0.3 119 0.4 8 10 21.8%

7 Polymer PS 50 69 54 63 4 4 9.0%

8 Polymer SAN 9.4 1.2 9.2 0.4 1 1 -2.6%

9 Polymer EPS 2.6 3.1 1.2 3.1 0 0 -53.1%

10 Elastomers SBR 138 25 126 29 12 11 -8.7%

11 Elastomers PBR 95 7 105 13 8 9 10.4%

12 Elastomers Butyl Rubber 63 0 70 0 5 6 12.0%

13 Inter Fibre MEG 1066 137 635 293 89 53 -40.5%

14 Inter Fibre PTA 522 212 570 162 43 47 9.3%

15 Inter Polymer SM 789 5 818 7 66 68 3.6%

16 Inter Polymer EDC 713 45 582 19 59 48 -18.5%

17 Inter Polymer VCM 484 0 458 0 40 38 -5.5%

Source: DGFT

Key Economic Indicators UoM Jan-19 Feb-19 Mar-19 Apr-19 May-19 June-19

Forex Reserves US $ Bn 397.0 401.8 407.0 418.5 419.9 427.7

Exchange rates 1 US$ 70.8 70.8 69.7 69.4 69.8 68.9

1 Euro 80.1 80.6 78.7 78.0 78.1 78.4

100 Jap Yen 64.0 63.6 62.7 62.2 63.4 63.9

1 Pound Sterling 91.3 94.1 91.8 90.4 89.9 87.6

IIP%age over Prev

month end1.4% 0.0% 0.4% 3.4% NA

Brent Crude Oil US$/MT 62.2

Naphtha C&F SEA US$/MT 465 508 540 569 544 465

C2 C&F SEA UD$/MT 812 1017 984 915 894 692

C3 C&F SEA US$/MT 880 864 828 816 801 810

Nl Combined presentation of CPMA & ICC was made to Secretary, DCPC on pre-budget recommendations covering full chain of chemicals & petrochemicals.

Nl Participated in the meeting with Commerce Secretary regarding US-China Trade War Opportunities for India. Industry was asked to identify areas to take advantage of the situation.

Nl Concerns were shared comprehensively with Secretary DCPC on RCEP with recommendations together with rational / justification during the meeting.

Nl Inputs on the specific problems with regard to India-Korea CEPA and India-Japan CEPA were provided to ASSOCHAM to take up with all concerned in GOI.

Nl Feedback provided on Korea’s Revised Request List for Tariff Concessions under India-Korea CEPA to Additional Secy DOC during the meeting followed by written communication base on inputs received from members.

Nl Participated in Round Table Meeting with Mr Piyush Goyal, Hon’ble Minister of Commerce & Industry and Railways organized by CII where industry across the sectors were present. Concerns on chemicals & petrochemicals were raised and appreciated to be followed up with meetings with administrative Ministry namely MOC & F / MOC&I.

Government Communications and

Interactions

53rd Annual Meeting