Here’s the stereotype….
Source of picture: www.watblog.com
By John Richardson
WE talked last week about how emerging markets continue to astound when it comes to demand, meaning that we might have to take a long and hard look at the parameters used to measure growth.
Further support for this argument came from a visit the blog paid last Friday to Reliance Industries’ Jamnagar refinery and petrochemicals complex in Gujarat, India. Many thanks to the good people at Reliance Industries Ltd (RIL) for arranging the trip at very short notice – particularly Kamal Nanavaty, president of the company’s crackers and polymers sector, and his team.
Anyway, during the trip it was pointed out to me that the first 1m tonne/year of polypropylene (PP) capacity at Jamnagar – which was brought on-stream in 1999 and integrated with the first refinery – is produced via four reactors.
The additional 900,000 tonne/year of PP of nameplate capacity is produced via just two Unipol reactors. This facility, fed by the second refinery at the site, was started-up in 2008.
Never before had a single Unipol reactor been designed to produce 450,000 tonne/year. The design has been replicated at the Yansab petrochemicals complex in Saudi Arabia, which was commissioned earlier this year, the blog understands.
The reason for the scale of the reactors at the second Jamnagar PP plant is the rapid growth in the Indian market. Demand is of a much-bigger volume than most commentators had expected and so it made economic sense to build reactors on this scale to produce single grades for extended periods of time.
Opportunities abound for further game-changing growth. For example, the Indian industry is reported to be working on persuading India’s railways to switch from using cotton or linen sheets and pillowcases in overnight sleeper-carriages to bedding made from non-woven PP.
Arguments being used include reducing what must be the enormous laundry bill incurred by state-owned Indian Railways. And as the non-woven PP sheets and pillowcase are disposed-of after one use, passengers would be guaranteed a clean bed.
Further – it makes it very economically viable to recycle PP-made bed clothes as there is only collection point: Where a train journey terminates.
An estimated six billion people travel by rail in India every year.
On a global basis, challenges still abound for the petrochemicals industry.
Perhaps the biggest current macro-economic threat at the moment is the eruption of an all-out currency war followed by waves of trade protectionism.
But for those on the ground with local knowledge of the changing characteristics of emerging markets, strong returns could continue.
Or has the blog abandoned its useful cynicism?