Polyethylene – Outlook & Opportunities

Jayakrishnan V.

Polyethylene Business

25th Jan’19

Forward Looking Statement

This presentation contains forward-looking statements which may be identified by their use of words like

“plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,” “estimates” or other words

of similar meaning. All statements that address expectations or projections about the future, including, but

not limited to, statements about the strategy for growth, product development, market position,

expenditures, and financial results, are forward-looking statements.

Forward-looking statements are based on certain assumptions and expectations of future events. The

companies referred to in this presentation cannot guarantee that these assumptions and expectations are

accurate or will be realized. The actual results, performance or achievements, could thus differ materially

from those projected in any such forward-looking statements. These companies assume no responsibility to

publicly amend, modify or revise any forward looking statements, on the basis of any subsequent

developments, information or events, or otherwise.

2

PE Global Scenario

2017-2022 AAGR

Global 4.5%

NA 2.8%

SA 3.5%

Europe 1.7%

NEA 6.0%

China 6.8%

SEA 5.1%

Africa/ ME 3.9%

Indian Sub. 8.4%

Source : IHS/Townsend

Global Polyethylene Demand is expected to cross 100 MMTPA in 2018.

Growth Rate ~ 4.9%

Expected AAGR 2017-2022 ~ 4.5%

Global Demand Expected to reach 135 MMT by 2026.

NEA

7%

China

32%

Africa/Middle

East

10%

Indian Sub.

7%

Europe

19%

South America

6%

North America

19%

Global PE Demand (2017)

Landscape is Expected to Remain the Same

PE Global demand-supply scenario

Source : IHS

37 38 40 42 44 46 48 50 52 55

83 83

8687

86

8990 90 89

87

85

84

89 88

91 91

9392

89

87

76

78

80

82

84

86

88

90

92

94

0

10

20

30

40

50

60

70

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

OR

(%

)

MM

TA

Global HDPE

Global Capacity Global Demand Global OR (%) Asia OR (%)

26 27 28 29 31 32 34 36 37 39

85

8889

92

87

82

8484 85

8484

8789

92

88

82

84

83

8584

76

78

80

82

84

86

88

90

92

94

-

10

20

30

40

50

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

OR

(%

)

MM

TA

Global LLDPE

Global Capacity Global Demand Global OR (%) Asia OR (%)

19 20 20 21 22 23 24 24 25 26 83

86 86 86

84

86 8687 87

88

8991 91

92

8889 89

90 91 91

78

80

82

84

86

88

90

92

94

-

5

10

15

20

25

30

35

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

OR

(%

)

MM

TA

Global LDPE

Global Capacity Global Demand Global OR (%) Asia OR (%)

PE Global demand-supply scenario

Source : Townsend

We are entering/entered era of overcapacity which will pull down operating rates.

Availability Constraint expected post 2023.

Iran and Former Soviet Countries can be potential suppliers.

India and Africa are potential Demand centres due to faster growth in per capita consumption.

PE Demand-supply scenario – North America

Source : Townsend

7MMT capacity Addition expected.

Operating Rates may fall initially due to time requirement for breaking into exports market.

Additional 3 MMT is expected to be exported from US over and above the current 3.7 MMT

PE Demand-supply scenario – China

Source : Townsend

Largest Consumer of Polyethylene in the world.

Growing @ 4.4%, Requires additional 20MMT by 2026.

Current Capacity of 13 MMT and 8MMT additional capacity in 12 years.

Imports ~ 6 to 8 MMT – 65% of the total trade balance market

PE Demand-supply scenario – India

Source : Townsend

Expected to show tightness in availability from 2021 onwards.

There can be a disruption post HMEL stabilization in 2022-23.

India has shown a growth rate of 8%, which would have been 11-12% based on GDP.

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

MM

TA

Years

Indian PE scenario

Total Capacity Imports Domestic Demand Exports

PE Demand-supply scenario – Per Capita Consumption

Source : Townsend

Healthy Potential in India considering very low Per Capita Consumption of PE ~ 3.5 Kg

But Growth till date is not in line with the same.

Boost in Infrastructure/Packaging/Agriculture – Potential Growth Centres.

Circular Economy / Sustainability – Should Prove a Blessing in Disguise

PE Trade Flow

Source : IHS

China to Remain the major focus.

East European Countries and Africa are Emerging as potential consumption centres.

INDIA – Encouraging Facts

• 2nd Largest Population in the World ~ 1.3 billion.

• Youngistan ~ Average Age 26.5 years.

• 50+ cities with Population over 1 Million.

• 2.5 Trillion USD Economy.

• Currently the World’s Third Largest national economy when measured in PPP terms.

• Over the next Decade, India’s GDP growth is set to increase the aggregate GDP growth of Japan, Germany, Brazil and Russia.

• 9% growth will take India to USD 10.4 Trillion Economy by 2034

INDIA – Encouraging Facts

• Middle class population set to increase from 0.72 billion in 2010 to 1.06 billion in 2021.

• Yield of food grain in India is expected to be 7.4 MT/hectare in 2034 from 4 MT/hectare in 2012.

• Retail Industry to grow at 10% to reach USD 1 Trillion by 2024.

• Organised Retail to grow from 8% in 2012 to 30% in 2024.

• India set to become: Largest two wheeler manufacturer, 5th

Largest Passenger Vehicle Manufacturer, 4th Largest Oil Refining Capacity, 2nd Largest textile manufacturer by 2025.

INDIA – Encouraging Facts

• India remains the fastest growing major economy in the world

OpportunitiesInflation under control and steady growth

GST Roll Out

Continued infrastructure investments

Slow but steady pick up in global economic growth

6.6

6.8

7

7.2

7.4

7.6

7.8

8

2014-152015-16

2016-172017-18

2018-19 est

7.2

7.9

7.1 7.17.3

GDP (%)

Indian Polyethylene Scenario

• PE Demand in India in 2018-19 is expected to be 5.4 MMT.

• Growth is expected to be 8% in FY 2019-20

Film & Sheet49%

Blow Molding16%

Injection Molding10%

Pipe and Profile 8%

Raffia 7%

Other10%

With Current Capacity Additions - Availability has become Highly Competitive

Indian Polyethylene Scenario

Major Focus Areas

Indian Polyethylene Scenario – Growth Boosters

PCPIRPLASTIC PARKS

SMART CITIES

Indian Polyethylene Scenario

Huge market potentialLow consumption base and urbanization

Population growth and youth dividend –driving consumption

Strong support from policy initiatives

India: Attractive and competitive marketDemands best in class Products and Services

Competitive supplyLocated close to Middle East and South East Asia

Low trade barriers for SEA and NEA

Significant domestic capacity growth with varied technologies

Indian Polyethylene Scenario – Rotational Moulding

0

20

40

60

80

100

120

140

2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 est

Rotational Moulding Sector

Domestic Production Imports Total

Availability and Price Competitiveness has increased

No Quantum Leap Observed in Industry

WHY ? RAW MATERIAL

APPLICATIONS

Competing Technologies

ReprocessRegulatory

Polyolefin Industry Success Factors

MARGIN CAPTURE

FEED STOCK

INTEGRATION

PROCESS / CATALYST

TECHNOLOGY

ACCESSING GROWTH

ACCESS TO GROWTH MARKETS

DIFFERENTIATION & APPLICATIONS

INDUSTRY RENEWAL

ADVACED ANALYTICS

DEMAND STIMULATION

CIRCULAR ECONOMY/

SUSTAINABILITY

Polyethylene Indian Scenario – Rotational Moulding

TOGETHER WHAT CAN BE DONE FURTHER

Thank you!