India’s production of raw materials is limited: but more plants seem unlikely until demand reaches a crucial level. Report by Liz White, editor
Production of raw materials for PU within India is "now nowhere near the demand levels," pointed out G Ramachandran, vice chairman of the Indian Polyurethane Association (IPUA) and ceo of propylene oxide (PO) supplier Manali Petrochemical.
"The time is ripe now for more big plants to come into India," Ramachandran said, in his speech at the opening of the PU TECH event.
The Manali executive also said he was happy that Evonik and Gujarat Alkalies and Chemicals Ltd are studying the feasibility of an HPPO (hydrogen peroxide to propylene oxide) plant in Gujarat state in western India.
Manali has carried out its own feasibility study for an HPPO plant, Ramachandran revealed, in a separate interview with UTI (see below). And the Manali executive pointed out that while gaining government approvals is often a stumbling block in such projects, for PO a bigger issue is ensuring a supply of propylene.
Looking at India's raw materials capability; versus demand, Steven English, global vice president of Dow Polyurethanes, pointed out that, "As you heard yesterday, demand is 300 to 400 kt for the whole of PU the sector in India. So it is still relatively small."
But, English commented, with an annual growth rate of 20 percent, "that is nearly 100 ktpa of new material needed every year."
For PO and polyols, English said, suppliers will reach a point where they need something on the ground, or ways of handling PO, for example. And then "they will need to build a polyols plant," he added.
Meanwhile, Dow has a large PO plant coming on stream in Thailand, noted Dr Mahesh Gopalasamudram, director of Dow Formulated Systems, based in Thane, India.
This is, "Dow's major contribution to raw material supply in India," it "massively improves our ability to supply into India," English said.
Dow is making some polyols at its site in Thailand, and will ultimately make PO there (using the HPPO route) - and in India, English said. Dow's aim is to avoid moving PO around if at all possible, he added.
English pointed out that in India, Dow is "at the whim of the infrastructure in country, as is everyone." Dow has bulk storage facilities (see Dow Below) , but also needs ports which are capable of handling bulk liquids. Mumbai is currently the only Indian port that can do this, English said.
The other issue is that it is not easy to handle the materials within India, he noted.
Mukesh Buhta of polyols producer Expanded Polymer Systems also welcomed the news of a potential HPPO plant in India. If this comes about, "We can expand the supplier range and that may allow us to expand the polyol plant more, if availability is better," he said.
But he pointed out his company now has a distinct advantage. It also has new bulk storage unit for PO which means Expanded Polymer Systems "has sufficient capacity to raise production to 45 ktpa at Dahej, and supply along the Mumbai - Delhi corridor, which is where the major Indian market is," said Buhta.
Isocyanate supply slower
Is India crying out for more TDI GNFC's marketing manager Jiten Desai agreed that the company expects a rapid sell-out of the 50 ktpa capacity it is adding at the moment, because TDI demand is rising rapidly in India.
Current TDI capacity at the Gujarati firm's first TDI plant is 17 ktpa, and this is all sold within India. And lPUA estimates total demand in India for TDIat around 35 to 40 ktpa, added Rajesh Bhargava, GNFC's general manager.
Most of the TDI is used in India's flexible slabstock foam sector, where market growth is good and a lot of own brands are being developed, Desai noted.
Asked would the group expand further, Desai said the company expects the plant to be sold out after between 5 and 10 years, if growth persists at 15 percent. Currently Indian foamers also import TDI from Korea and Japan, he said.
GNFC has provision for land and utilities for a further TDI expansion. But it aims to see how the 50 ktpa sells and perhaps to debottleneck later and expand in that manner.
"First of all the best option is to see the take-up of the added 50 ktpa," Desai said.
All of India's MDI (methylene diphenyl diisocyanate) is imported, meanwhile.
At PU TECH, MDI supplier Huntsman announced plans to invest $10 million in a new systems house in Thane, which will replace its current one in Pune, Mumbai (see p 14).
Asked would Huntsman set up an MDI plant in India, Webster merely said: "I think it's unquestionably ... true that the Indian market before long will get to a stage where raw materials become more and more important."
But he feel it is probably going to happen more on the polyols side first; "I think MDI and TDI will come. The question is where and when," said Webster.
Huntsman brings MDI in from plants in China, the US or Europe. Dow does the same, sourcing MDI from the most likely plant, said English, listing facilities in Portugal, Holland, Germany, the US and Korea.
Another factor in MDI, is that the current plants are so big that suppliers can easily fill India's needs from outside, without any delay, at the same sort of price, said Ramachandran.
Currently, world-scale MDI plants are so huge - new ones are up to 400 ktpa – that India does not warrant this size of plant, said GNFC's senior marketing manager Jiten Desai.
Ramachandran said that Manali had a licence for an MDI plant in 1990, but the timing was wrong, with little demand in India. Manali gave up the license and Mitsui built a plant in Korea, instead of one in India, he added.
But times have changed: "Manali used to struggle to sell 300 tonnes a year in those days. Now we sell 300 tonnes every day," he said.
Asked if he thought someone would set up an MDI unit in India at some stage Ramachandran said: "Accepting that Bhopal is hunting 1n the minds of people ..." nevertheless "We could see an MDI plant in India within the ' next five years." [Ramachandran was referring to the disaster at Union Carbide's plant in Bhopal, Madhya Pradesh, in 1984 in which a methyl isocyanate leak killed 4000 people and injured over half-a-million more. - Ed]
Also, investment in an MDI plant is high and the technology is not easily available, with only the ma1or PU raw materials groups having the appropriate expertise, he said.
Manali now has a close relationship with Yanta1 Wanhua Polyurethanes in China and Nippon Polyurethane of Japan, to source MDI for its systems, said Ramachandran.
GNFC's Desai also pointed out that most additives for the PU sector are imported.
Foamers see some polyol issues
At flexible foam producer Ufoam, raw material supply is adequate, but joint managing director Badnnath Sarangapani said the market view is that polyols may become hard to get hold of within India. Hence "more local production would be welcome," he added.
Springfeel director Sameer Malhotra made a similar point, noting that he has been told that polyols will be in short supply.
India will take time to develop its own raw materials capabilities, Sarangapani feels.
Springfeel sources polyols from Manali and imports some from Bayer, said Malhotra. It sources TDI from GNFC, as well as importing it ram Mitsui, Bayer and BASF, he said.
Since the capacity of the local TDI and polyol suppliers is limited, they cannot meet all of India's needs. Processors must import to meet the shortfall, Malhotra commented.
Hence it helps to buy from a wide range of sources to spread any risk. Springfeel cultivates relationships with a range of suppliers, he said.
But with the strength of market growth, Malhotra feels there is a definite need for more local production, and it would make Springfeel's production and logist ics simpler.
Pricing is fairly standard in the sector, so that local manufacture will not make a huge difference here, he commented.
Malhotra has heard that Shell plans to make polyols locally by 2013, he said.
Malhotra noted that raw materials pricing is an issue in India, as everywhere. "Last year it was TDI and this year it is polyols going up and up," he commented. All other additives are increasing in price, he said. And "we have not been able to pass the price increases on to the consumer," the Springfeel director said.
"We have increased the price of foam, but not enough to cover costs," Malhotra said. "As a result, he said, most flexible foam producers enjoyed much better margins last year."
INDIA'S RAW MATERIALS
- Manali:36 ktpa of propylene oxide (PO) and 50 ktpa of polyols.
- Expanded Polymer Systems:15 ktpa polyester polyols and 25 ktpa of polyether polyols.
- BASF: polyester polyols for shoe soles.
- GNFC started TDI (toluene diisocyanate) manufacture in 1998,with capacity for 17 ktpa currently, and it is set to add 50 ktpa next year.
- Systems houses: Bayer, BASF, Dow,Huntsman, Expanded,Manali
MANALI STUDYI NG HPPO
Manali Petrochemical has "done a feasibility study already," for an HPPO (hydrogen peroxide to PO) unit and feels "it is possible, definitely to build at least a 150 kilotonnes-per-annum (ktpa) plant to meet local demand," revealed G Ramachandran, managing director of Manali Petrochemical.
Such a unit would take four years to develop, and represent a major investment by Manali, noted Ramachandran, saying that here Manali is in talks with Uhde ,who developed the technology.
Normally the group would not reveal this until a decision was nearer, he said, noting that propylene supply is, "the bottleneck in these plants."
Ramachandran said that the PO from an HPPO will not be for export, because "the Indian market will have expanded to take up this amount. ...
Definitely in five years’ time,[PO] demand will be much higher," he said, noting that, "most is for captive use in our plants."
Manali also aims to have its own ethylene oxide, and may be able to tie this up soon, he said.
Manalihas expanded its PO capacity, "with our own technology, to 36 ktpa," said Ramachandran: despite this, India "needs more than we produce."
Manali can, however, process up to 66 ktpa of PO and is building a PO storage facility at Chennai, to store imports to process further, he said.
"At the moment there is an international shortage of PO, but as an important producer, we have been talking to suppliers for some time and building relationships," the Manali executive said.
For rigid polyols, Manali converts all it makes into systems and sells none as polyols. Whirlpool in India, for example, buys systems from Manali for its two big local plants. Manali also supplies the major automotive seating makers in India.
In flexible moulded foam, however it supplies polyols to some of the multinational systems houses, and sells 12 percent of these as systems,
By 2012,Manali will launch its own blends here, Ramachandran added.
Manali has a good hold on flexible slabstock systems, with a 35 percent market share, he said.
Sales for Manali are about S120 million this year, but next year Ramachandran expects sales to jump to about $175 million.
|Manali Facilities||Plant 1||Plant 2||Total|
MORE TDI NEARLY AVAILABLE
Construction of a 50-kilotonnes-per-annum (ktpa) plant at Dahej to make TDI (toluene diisocyanate) by Gujarat Narmada Valley Fertilizers Co. Ltd GNFC) is well under way, with activity in full swing, said Rajesh Bhargava, general manager. Start-up is expected by this year's end or early next year,
State-owned GNFC planned to have the new plant running in 2010, but encountered obstacles beyond its control, said Bhargava, and had to reorient the layout, and do some re-engineering.
GNFC has invested Rupees 1600 crore ($350 million) in the TDI project so far, some of this via loans said Jiten Desai, senior marketing manager.
Ai Dahej, GNFC has good port access, Bhargava said. GNFC buys toluene and benzene from Reliance Industries Ltd, and makes its own aniline. Many chlorine producers are nearby, and GNFC has its own source of carbon monoxide and hydrogen.
In TDI, turnover is about $50 million, Bhargava said, while group turnover is S 1000 million from products including fertilisers, and GNFC is expanding in products such as nitric acid.
GNFC may decide to make a small amount of PU systems in India, once the new TDI plant is running, to generate added value for the company.
MORE POLYOL CAPACITY COMING
Systems and polyols supplier Expanded Polymer Systems Pvt ltd has just started up a new unit with 9-kilotonnes-per-annum (ktpa) capacity for polyether polyols at its second facility, in Dahej.
This is the first phase of a larger expansion, which will see the company start up another 9 ktpa of rigid foam polyols by July this year, said Mukesh Buhta, chairman and managing director.
The first expansion is for polyether polyols of 3000-3500 MWt for flexible foam, Buhta said. "By next March (2012),we will have another 6 ktpa capacity for 5000-6000 MWt flexible foam polyols," he said, in a 11 March interview at PU TECH.
Present capacity for the firm, at its original site in Pawne,25 km from Mumbai,is 5 ktpa for rigid polyols and 6 ktpa of polyester polyols for various uses .Buhta noted: "Our products are moving to more speciality types."
He said the new facilities are starting later than expected because of the length of time needed for aspects such as environmental permits.
"We have also set up bulk storage tanks at Dahej...with capacity to import about 2 kt at a time of propylene oxide (PO)," said Buhta. The tanks are only 4 km from the Dahej plant, Buhta said, noting that Reliance Industries Ltd is 3km away,and Expanded can source ethylene oxide from there. The company buys PO from major suppliers, said Buhta.
Business for Expanded Polymer Systems grew this year in value at around 20 percent,and in volume by only about lO percent,he observed. "We expect to grow in volumes in 2011-2012 by 40 percent," having made about 20 kt of product in fiscal2010/2011, Buhta added.
"Rigid polyols is our traditional business," he said, with Mannish polyols and aromatic polyester polyols also on the slate.