Petro chemicals

Petro chemical is one of the essential commodities required in every nation – developing and developed.

And the fact remains that in almost all cases the demand tends to outweigh the supply, causing prices to rise, from tie to time. In fact, in India, petrol and diesel prices have seen a constant upswing since the last couple of years.

In India’s commodity market there three major players, so to speak in the area of petro chemicals; these being:

High Density Polyethylene (HDPE)
Polypropylene (PP)
PVC

India is estimated to produce approximately 4,500 Thousand metric tons of petro chemicals, per annum. Of this about 60 to 70 per cent accounts for the production of high density polyethylene (PE) and polypropylene (PP).

The per capita consumption of petro chemicals averages to 4 Kilos, as against the world mean being 20 Kilos, and that of developed nations going beyond 100 Kilos. The reason for this is the constant expansion of the polymer industry, which is slated to be growing at an annual average of 12 to 15 per cent.

Because of demand almost always exceeding the supply the buyers tend to be at the mercy of the sellers. Their bargaining power seems to diminish when dealing with their suppliers. And main price determining factor is cost of raw materials that seems to be highly volatile, mostly tilting towards steep upward swings.

However, on the positive side, in the recent years the Government has been constantly working towards lowering the customs duty on petro chemicals and their raw products.