APIC '07: India acetyls story to follow China - BP

18 May 2007 05:03  [Source: ICIS news]

By Jeanne Lim

TAIPEI (ICIS news)--The acetic acid story in India is likely to follow that of China's as demand for synthetic fibre and downstream vinyl acetate monomer (VAM) surges in the subcontinent in the next decade, a senior BP official said on Friday.

Polyester demand in India is relatively small today despite the huge population, due to a strong preference for natural fibre, Gordon Wilson, general manager of BP Acetyls China, told ICIS news on the sidelines of the 28th Asia Petrochemical Industry Conference.

This is, however, set to change as polyester technology improves, he said, diminishing the disadvantages that synthetic fibre has compared with cotton.

A second factor fuelling polyester demand is a physical land constraint in India, limiting the area where cotton can grow, he added.

As a result, demand for purified terephathalic acid (PTA), a fibre intermediary which uses acetic acid as a carrier, is expected to soar.

In addition, demand for VAM, which has a lot of downstream applications such as emulsion paints, is expected to explode, said Woo Hon Wai, CEO of BP Petronas Acetyls in Malaysia, who was also present at the interview.

"India has always been a high tariff country but in the last two years, tariffs have been coming down. Lower costs... and the growth of the middle class is also fuelling demand. We'll see an explosion in demand for acetic acid over the next decade," he said.

"There will be further investments along this chain in India. The story in India is similar to China," he said, adding that Indian majors like Reliance and Indian Oil Corp have been setting up PTA plants.

He declined to say, however, if BP would invest in India anytime soon.

BP currently produces 1.7m tonnes/year of acetic acid in Asia, excluding a new 500,000 tonne/year joint venture with Sinopec in Nanjing, China.

It has another facility in Chongqing as well as joint ventures with Petronas in Malaysia, Samsung in South Korea and Formosa in Taiwan.

Globally, the acetic acid major competes with Celanese. On a local scale, it competes with China's Jiangsu Sopo and Shanghai Wujing, and Japan's Showa Denko and Daicel.

Wilson is optimistic that BP will fare well in the Asia, where it has forecast 5-6% growth over the next couple of years. This growth is led China where demand for acetic acid has grown 15-16% over the last five year, said Wilson, estimating that BP has invested a total of $4bn in the northeast Asia country.

"It's one of the advantages in terms of BP and joint ventures is that we have major plants on the main acetic acid markets. [We are good at] optimising systems internally to create efficiency for ourselves," he said.

Wong summed it up, saying: "We manage our business on a global business. When one plant is down, the impact is there, no doubt, but chances are we're in a better position to manage that than some of our competitors can."

By: Jeanne Lim
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