tag:www.icis.com,2012:/blogs/india-chemicals//69 2009-10-01T04:35:23Z Movable Type Enterprise 4.37 tag:www.icis.com,2009:/blogs/india-chemicals//69.69587 2009-10-01T04:34:10Z 2009-10-01T04:35:23Z

I will now be blogging on Asian Chemical Connections. This blog covers chemical industry developments across the region, including India. I appreciate your support to the India Chemicals blog. And thanks once again for your comments and suggestions. I look...

Malini Hariharan Asian Chemical Connections. This blog covers chemical industry developments across the region, including India. I appreciate your support to the India Chemicals blog. And thanks once again for your comments and suggestions. I look forward to interacting with you on Asian Chemical Connections ]]> tag:www.icis.com,2009:/blogs/india-chemicals//69.68133 2009-09-14T19:49:13Z 2009-09-14T19:57:08Z

Chemical companies are constantly adapting to external challenges and this is clearly evident in a comparison of the ICIS listing of top chemical companies in 2008 and 1998. Three companies that figured in the top 10 list for 1998 have...

Malini Hariharan comparison of the ICIS listing of top chemical companies in 2008 and 1998. Three companies that figured in the top 10 list for 1998 have disappeared - ICI, Hoechst and Rhone Poulenc - as a result of mergers and acquisitions while Bayer, Elf Group and Akzo Nobel have fallen from the top 10. Only BASF, Dow Chemical, DuPont and Mitsubishi Chemical are still in the top 10 although they are being challenged by new entrants such as Sabic, Sinopec, Ineos and LyondellBasell. Sabic leads the pack in terms of sales growth during the last 10 years with sales rising from $4.9bn to $40bn. But it is BASF which heads the ICIS top 100 table for 2008 with sales of $87.8bn. ExxonMobil pushed ahead of Dow Chemical to capture the number two spot with sales of $58.1bn. Dow came in third with sales of $57.5bn. Only one Indian company figures on the list - Reliance Industries which is ranked at No 34 Last year's financial crisis left its mark on the industry. Of the top 100 companies, 23 posted net losses in 2008 and overall profits fell 53% year-on-year. A full listing of the top 100 chemical companies is available here. ]]> tag:www.icis.com,2009:/blogs/india-chemicals//69.67129 2009-08-28T09:53:31Z 2009-08-28T10:02:48Z

A reader of this blog has alerted me about serious problems at Mangalore Refinery & Petrochemicals Ltd (MRPL). An electrical short circuit has forced the company to stop operations at one crude distillation unit, two hydrocracker units, two visbreaker units,...

Malini Hariharan Mangalore Refinery & Petrochemicals Ltd (MRPL). An electrical short circuit has forced the company to stop operations at one crude distillation unit, two hydrocracker units, two visbreaker units, two sulphur recovery units and two reformers. The refinery is said to be operating at only 30%. MRPL's deputy general manager of corporate communications attributed the accident to a rat that snipped the power cables. However, another report places the blame on two ghosts who have taken shelter in a banyan tree near the entrance to the plant. But it does not explain why the ghosts decided to trip the plant. And the Deccan Chronicle writes that a special 'pooja' has been performed to seek divine protection and also appease Mother Earth as a number of trees were cut when land was acquired for expansion of the refinery. Is God listening?]]> tag:www.icis.com,2009:/blogs/india-chemicals//69.66888 2009-08-26T06:35:54Z 2009-08-26T06:44:43Z

With the threat of drought looming large over most of India its time to ask another decoupling question. Can the Indian economy escape from the effects of a drought? I found some answers in Niranjan Rajadhyaksha's analysis in today's Mint....

Malini Hariharan analysis in today's Mint. Most economists estimate that the drought will shave off economic growth by one percentage point - a figure that India can live with especially if the ongoing recovery in the manufacturing sector takes root. This would also be in sharp contrast to the droughts experienced in the 1965 and 1972 when economic growth had plunged by 10%. But droughts in 1987 and 2002 led to only a two percentage point reduction in GDP growth. Rajadhyaksha suggests three possible reasons to explain the decoupling: the contribution of agriculture to the overall economy has dropped significantly, the rural economy has diversified sufficiently that households have alternative sources of income when agriculture fails and the growth experienced in the last few years had few links to the rural poor. The last is a little difficult to understand especially as rural incomes are supposed to have become important demand drivers for a wide variety of products. This was also one of the reasons cited for the very healthy polymer demand that India experienced last year despite the global economic crisis. ]]> tag:www.icis.com,2009:/blogs/india-chemicals//69.66736 2009-08-24T05:12:39Z 2009-08-24T05:17:49Z

Green chemistry is gaining ground in India with alert companies following the global trend to make products from renewable feedstocks, reduce waste and energy consumption. Pradip Kadakia, Abhishek Nigam and Ashwin Rao of Tata Strategic Management Group (TSMG) say that...

Malini Hariharan Tata Strategic Management Group (TSMG) say that Indian chemical companies are making good progress in lowering the industry's environmental footprint by adopting green chemistry strategies. They point out that growing environmental consciousness has resulted in increasing demand for green products and processes such as green buildings. These buildings cost 3-8% more than conventional buildings but payback in less than three years through operational savings. More than 300 green buildings have already been constructed in India and 700 more are due to be built by 2010. These buildings materials will spur demand for products such as high performance glass, low VOC paints and fly ash blocks. India with its huge arable land area has a good potential for bioresources. And despite concerns about using land for non food applications, national laboratories, academic institutions and companies are actively pursuing biodiesel, bioethanol, bio-surfactants, biopolymers and biopharmaceuticals. They cite the example of Godavari Biorefineries that has started manufacturing products from renewable resources forming an entire value chain from sugarcane to sugar to other products such as ethanol, chemicals and biofertilisers. But though green chemistry has taken off more support will be needed from the government. And companies too need to plan out their strategy carefully rather than simply following a global trend. TSMG suggests building clear sustainability goals that can be translated to market facing goals. And companies also need to assess life cycles of existing products and look for opportunities to introduce green products. And opportunities can come up in unexpected areas. A recent report in ICIS Chemical Business highlights the move by sporting good manufacturers to incorporate chemicals based on renewable resources. For example, Merquinsa, a Spanish thermoplastic polyurethane (TPU) producer, is collaborating with Brooks Sports, a Washington, US-based sports equipment company, to develop sustainable performance running footwear. The bio-TPUs are renewable-sourced, with 20-90% bio-content, says Merquinsa.]]> tag:www.icis.com,2009:/blogs/india-chemicals//69.65636 2009-08-06T05:26:20Z 2009-08-06T05:31:45Z

The economic crisis has led to one favourable result for the chemical industry. After years of seeing graduate chemical engineers migrate to more lucrative sectors such as IT or finance the chemical industry is now proving to be attractive. I...

Malini Hariharan migrate to more lucrative sectors such as IT or finance the chemical industry is now proving to be attractive. I recently had an opportunity to meet Professor GD Yadav of Mumbai's Institute of Chemical Technology (ICT) and Professor Ghosh of the Centre of Polymer Sciences at IIT Delhi and both confirmed this trend. There are several reasons for this, explained Professor Yadav. "Earlier IT was seen as a white-collar job. The sector was attractive as it offered good jobs and salaries. But that initial attraction has gone," he said. With IT companies leading the way in shedding jobs students have become wary of joining the sector. Additionally there are not too many jobs on offer. At the same time salary levels in the chemical industry have improved. The 2010 recruitment season has started at the Institute of Chemical Technology and students have been placed at chemical companies with a starting salary of Rs600,000/year. The highest salary offered is Rs1,400,000/year. Professor Ghosh also highlighted another trend - students who drifted to IT are now looking to get back to their core discipline. He cited the example of a polymer engineering graduate who wants to return to the chemical industry after working at a large IT company for a couple of years. But compromises will have to be made as two years of industry experience has been lost. Graduates are, for the time being, valuing job security over salary. Chemical companies should welcome them even as they battle to keep trim costs and boost profits. ]]> tag:www.icis.com,2009:/blogs/india-chemicals//69.65445 2009-08-04T06:09:14Z 2009-08-04T06:43:08Z

It seems to be the season for family disputes and India is not the only country seeing this. Reliance Industries has company in South Korea's Kumho Petrochemicals where two brothers are struggling to take control of the Kumho Asiana Group....

Malini Hariharan to take control of the Kumho Asiana Group. Park Chan-koo, the younger brother was yesterday dismissed as chairman of the group's petrochemical division in a hastily-arranged board meeting. He has accused his elder brother of, not surprisingly, keeping him in the dark about the top item on the agenda for the board meeting - his dismissal. Kumho Petrochemicals with a turnover of $2.61bn is involved in synthetic rubbers, synthetic resins and speciality chemicals while the group has interests in the automotive, leisure, logistics and airline sectors. Pic by sir_watkyn The Kumho story has many interesting twists and turns but cannot yet be compared with the epic battle between the Ambani brothers of Reliance which entered a new phase. The latest round involving allocation of gas from the KG basin has seen so many claims and counter claims that it has become difficult to track who has the right to the gas. Although the matter will be settled by the Supreme Court, the case is being intensely argued out in the media. The issue even rocked the parliament yesterday with calls for resignation of the petroleum minister. The rapidly escalating battle certainly shown government officials to be inept at managing allocation of gas - a resource that the country desperately short of. And such feuds only tarnish the reputation of the affected companies. ]]> tag:www.icis.com,2009:/blogs/india-chemicals//69.65254 2009-07-31T04:54:06Z 2009-07-31T05:00:54Z

It is more than a month since the commerce ministry announced stiff antidumping duties (ADD) on polypropylene (PP) imports from Saudi Arabia, Singapore and Oman. But a customs notification has yet to be released and this is puzzling many industry...

Malini Hariharan announced stiff antidumping duties (ADD) on polypropylene (PP) imports from Saudi Arabia, Singapore and Oman. But a customs notification has yet to be released and this is puzzling many industry players. The customs notification, seen as a formality, is usually out within a week after an announcement by the commerce ministry. It was initially believed that the delay was because government officials were busy preparing for the Indian budget that was put forward on 6 July. But it is three weeks since the budget and everyone is still waiting for the notification. Nobody seems to know the reason for the delay. But I have been hearing that affected Saudi producers, which includes Sabic and Advanced Polypropylene Co (APC), have taken up the issue at the 'highest level' and that meetings have been held with Indian government officials. I wonder if this has resulted in second thoughts. And I also wonder if the strong opposition will influence producers' plans for ADD on polyethylene (PE) imports from the Middle East. Meanwhile Indian chemical producers are continuing their ADD spree. Latest additions to the long list of products under investigation include polyol, titanium dioxide and caustic soda.]]> tag:www.icis.com,2009:/blogs/india-chemicals//69.65093 2009-07-29T12:47:56Z 2009-07-29T12:55:45Z

The good things in life are rarely free and that applies to solar power too. An analysis on this sector in ICIS chemical business highlights how high investment costs associated with photovoltaic (PV) cells has prevented the technology from being...

Malini Hariharan analysis on this sector in ICIS chemical business highlights how high investment costs associated with photovoltaic (PV) cells has prevented the technology from being cost competitive on a standalone basis. Photo by juicyrai But a step-change in the economic competitiveness of PV cells is imminent, say Alexander Keller and Thorsten Ploss of Roland Berger Strategy Consultants. Grid parity or the point at which solar electricity becomes equal or cheaper than electricity from conventional sources could be realised by 2015, five years ahead than earlier estimates. The consultancy says that chemical suppliers to the PV industry face two structural challenges - the shift to China and the move from conventional to thin-film technology. Asia's (excluding Japan) share in the global PV market is projected to grow to more than 40% in 2030 from just 2.8% in 2007. Both India and China will be driving this growth. China plans to spend Euro3.2bn over the next five years while India is expected to unveil in September a target of generating 20GW of solar electricity by 2020. The shift to thin-film is expected to provide major opportunities to the chemical industry but companies will need to adapt. While the long term prospects are good, Indian companies are facing short term challenges. This is evident at Moser Baer Photo Voltaic which has deferred plans for the construction of a plant in Chennai due to liquidity constraints and production mismatch. The company has also temporarily closed a plant at Noida due to high stocks. A little bit of support will be useful. ]]> tag:www.icis.com,2009:/blogs/india-chemicals//69.64962 2009-07-28T08:53:06Z 2009-07-28T09:05:31Z

China, India and Indonesia are powering Asia's economic recovery this year prompting one economist to club the three to form Asia's "next growth triangle". A recent report by CLSA, titled Chindonesia: Enter the Komodo, estimates that the three countries will...

Malini Hariharan recent report by CLSA, titled Chindonesia: Enter the Komodo, estimates that the three countries will generate $10 trillion of wealth for investors by 2015. "Together, China and India are increasingly becoming the biggest marketplace for almost everything sold on the planet," writes Nicholas Cashmore of CLSA. He is also calling for Indonesia's inclusion among the BRIC economies. "As a leading supplier of commodities, Indonesia is leveraged to the growth of Chindia," says Cashmore referring to China and India. "Indonesia is ready to rise in the world economic hierarchy and take its place alongside China and India." The importance of the three countries is already evident in the polyolefins market. China's imports of polyolefins have soared in the first six months of this year providing much needed succour to the global market. HdPE imports were up 62% at 1.92m tonnes; ldPE up at 94% at 689,000 tonnes, lldPE up 52% at 1.13m tonnes and PP up 50% at 1.96m tonnes. A fair bit of imports is probably being held as stocks and easy availability of credit has lured speculators to the polyolefins market. But three are not many who doubt that China's massive economic stimulus program has played a big role in boosting domestic demand. Indonesian PE and PP demand are forecast to growth by at least 4-5% this year. "The last two months have been very good and all resin manufacturers are running at 90-100% of capacity," says Budi Sadiman of the Indonesian Olefin & Plastic Industry Association (INAPLAS). Support is coming in from all end-use sectors except automobiles, building and construction. India was one of the few countries that did not see a drop in demand last year. And it should be easy to deliver a growth of at least 10% this year in PE and PP with the key drivers being the packaging and pipe sectors. So watch out for 'Chindonesia' this year.]]> tag:www.icis.com,2009:/blogs/india-chemicals//69.64844 2009-07-27T05:06:40Z 2009-07-27T05:12:10Z

Have Indian fertiliser companies been able to break a stranglehold that major producers have on the global potash market? Indian papers are full of reports on how Indian companies have succeeded in doing this by securing a contract price of...

Malini Hariharan reports on how Indian companies have succeeded in doing this by securing a contract price of $460/tonne for supplies in 2009-10, about $165/tonne lower than the previous contract. The drop comes after Indian and Chinese buyers had reluctantly accepted a steep hike of $355/tonne and $400/tonne respectively in 2008. These hikes were based on an over-stretched supply position, strong demand and firm spot prices. But the situation has reversed this year as a fall in crop prices since 2008 has seen demand slump leaving potash producers with heavy stocks. Global capacity utilisation is estimated at 40-50%. Indian companies have successfully taken advantage of this position. But producers, who have seen erosion in profits, are hoping for a quick reversal in fortunes. Potash Corp has warned that a looming global food crisis will result in increased demand for potash and other fertilisers. US-based Mosaic has predicted that low inventories will soon bring Chinese buyers to the import market. China imported 9.5m tonnes in 2007 and 5.5m tonnes in 2008. The Chinese government is reported to be limiting 2009 imports to about 7m tonnes. India is expected to import about 4.5m tonnes of potash in the year ending 31 March 2010 and it has already booked 3.2m tonnes, reports ICIS news. Producers might well be trying to talk themselves out of a difficult market situation. But if their predictions come true Indian companies could find that the stranglehold has not been broken. ]]> tag:www.icis.com,2009:/blogs/india-chemicals//69.64338 2009-07-20T09:37:57Z 2009-07-20T09:51:12Z

We may finally be seeing some balance in the debate on plastic bags and pollution. Rather than being swayed by NGOs to introduce a blanket ban on plastic bags, Jairam Ramesh, the new environment minister, is pushing for greater recycling,...

Malini Hariharan pushing for greater recycling, better waste management and the use of biodegradable plastics. Scenes such as the one below certainly don't help the cause of the plastics industry. Photo by Dwanjabi A closer look at the picture shows that most of the bags are below 20 microns. The industry is all for banning these bags which litter the streets and clog the drains, but in the words of one industry insider - there is a lot of politics involved in banning these type of bags. So you either have local governments, such as the one in Delhi, introducing a blanket ban or others that prefer to turn a blind eye to this problem. The difficulty in implementing a ban that restricts use of all plastic bags does not appear to worry the Delhi government. Its stand was recently upheld by the Delhi High Court which dismissed a petition by the All India Plastics Manufacturers Association on this issue. Delhi has banned the use of plastic bags in shopping malls, five star hotels, restaurants, dairies and fruit and vegetable outlets. Replacing plastics with jute or paper is not the answer as these alternatives have their limitations and can be environmentally unfriendly in their own way. Recycling is probably the best way forward. And Conserve India is showing how this can be done fashionably. This non-profit organisation recycles polyethylene bags (hand picked from the streets of Delhi) into evening bags, totes and other fashion accessories. It was in 2002 that Anita Ahuja of Conserve India got the idea of recycling bags. It took a year to develop the technology and simple end-products. Today, the organisation, which has created income generation opportunities for many of Delhi's rag pickers, deals not only with thin gauge plastic bags but also with other types of plastics and exports most of its production. Ahuja explains that she is not for or against a ban on plastics in Delhi. "It is a global problem," she emphasises. She makes another valid point. Today, even the poorest of poor use common plastic bags in their homes. In some case, these bags, stitched together, double up as temporary roofs. The government should not be taking away what a poor man finds useful. There is plenty of other plastic packaging waste generated by rich households which the government is welcome to ban.]]> tag:www.icis.com,2009:/blogs/india-chemicals//69.63302 2009-07-08T04:36:06Z 2009-07-08T04:51:30Z

With the budget offering little to the chemicals industry it is time to pile on to the rural rickshaw and hope for a trickle down efect from the enhanced spending that the government has planned in this part of India....

Malini Hariharan Photo by BriceFR This is entirely possible. More money in the hands of the rural population through various schemes including one that offers guaranteed employment should boost demand for a wide variety of products. We have already experienced the power of the rural market. During last year's crisis, demand from the rural population had saved many companies. Another plus should be the increased allocation of funds for the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). This programme will among other things, invest in new water and sanitation pipes in 65 cities around the country. It is estimated that investment in each city would result in 4000-5000 tonnes of additional polymer demand for pipes. But I was surprised at the government's decision to double excise duty on manmade fibres (polyester, acrylic and nylon) and yarn to 8% especially as the industry has been pushing hard for a level playing field with cotton. They had been asking for removal of excise and customs duty on these fibres. The increase comes at a time when the textile industry has been battling hard to overcome reduced demand from the export market. The move, big negative for companies such as Reliance Industriesand Indorama Synthetics, has drawn strong criticism from the industry. But is the government listening? The government also appears to be paying scant attention to yet another demand - removal of 5% import duty on naphtha used for polymer production. ]]> tag:www.icis.com,2009:/blogs/india-chemicals//69.60286 2009-07-01T10:18:15Z 2009-07-01T10:23:20Z

The 100-day fever is fast spreading and the Ministry of Chemicals & Fertilisers is the latest casualty. A very bland press release outlining what the ministry plans to achieve over the next three months has come my way. I started...

Malini Hariharan press release outlining what the ministry plans to achieve over the next three months has come my way. I started reading the release with a great deal of scepticism and was convinced at the end that my doubts were not misplaced. So what does the ministry want to achieve? On the fertilisers front, it plans to upgrade the fertiliser monitoring system to ensure timely availability of fertilisers and quick disbursal of subsidy, develop options to revive closed urea units, introduce an attractive investment policy and create a road map for restructuring of sick public sector units through financial restructuring and/or changing feedstock from naphtha to gas. The PCPIR (Petroleum Chemicals and Petrochemicals Investment Region Policy) dream is still alive. The aim now is to sign a memorandum of agreement with Andhra Pradesh, Gujarat and West Bengal before 30 August. Other targets for the department of chemicals include speedy implementation of Gail's cracker project at Assam and to start a plastic waste management centre at Guwahati, Assam and a plastics technology institute at Jaipur There is nothing really new in what the ministry has planned. Many of these targets should have been achieved in 2008 or even earlier. The prime minister's 100 day reforms mantra is laudable but I think the industry needs something more than just honouring old promises. ]]> tag:www.icis.com,2009:/blogs/india-chemicals//69.59883 2009-06-25T09:28:14Z 2009-06-25T09:32:29Z

I was at a Dow Corning press conference yesterday for the launch of an expanded Xiameter platform in India, another step in its effort to tackle commoditisation of the silicones business. The no-frills Xiameter, a web-based ordering service, was launched...

Malini Hariharan I was at a Dow Corning press conference yesterday for the launch of an expanded Xiameter platform in India, another step in its effort to tackle commoditisation of the silicones business. The no-frills Xiameter, a web-based ordering service, was launched a few years back as customers had become familiar with silicone products and were no longer interested in paying for expensive technical service. Now as competition for standard grades gets stronger and more speciality grades turn into commodity, the number of products offered via Xiameter is being doubled to 2,100, nearly one third of the company's 7,000-strong product portfolio. The successful Xiameter business model helps differentiate price-driven customers from innovators, explained Jean Paul Mollie, region president for India, Middle East and South Africa at Dow Corning. While the Xiameter brand offers standard silicones at market prices, the Dow Corning brand offers speciality products and new applications for customers wanting customized solutions and technical support. Interestingly, nearly 40% of sales of the two brands is now web-based. The expansion of the Xiameter platform illustrates an ongoing challenge facing speciality chemical companies. As no product remains a speciality forever how should companies handle commodity products without diluting the essence of the specialities business - innovation and service? Should portfolios be continuously reassessed to reduce focus on maturing products? How much time and money should be invested in developing new business models to maintain cost-leadership in commodity grades? How can commodity markets be serviced most efficiently? Is Internet the answer? Mollie declined to estimate the size of the Indian market for silicones and would only say that the country was seeing strong double-digit growth. Dow Corning will be focusing on opportunities in the transportation, construction, solar energy and life science sectors in the country. Dow Corning has a strong focus on solar power globally and has plans to expand capacity by 90% within the next four years. A new solar solutions application centre is being set up in South Korea to cater to the Asian market.