New Delhi – India’s polyether polyol imports continue to surge as the market for polyurethane grows, despite of the tariffs that have been imposed for more than a decade. This is because of structural problems in the country's petrochemical sector.
According to industry sources and a new report from McKinsey, polyether polyols tend to be imported from Saudi Arabia, Singapore and China, as well as Europe.
The country imported 297kT polyols in 2019, the last year for which data are available. The overall size of the market is between 350kT and 360kT, with the balance made up by a growing number local producers.
Manali Petrochemical and Chennai Petrochemicals make about 60kT/year between them. Manali, which announced a capicity expansion to 100kT/year, supplies the majority of this.
'The unavailability of the key raw material like propylene oxide is also a major factor for the low production of polyether polyols in the country,' a polyurethane industry source said.
The minimum world scale for a polyols plant is between 150kT and 200kT/year and that could ease the situation, but it would require a huge investment. 'Moreover, it requires approvals from the environment ministry, therefore, small plants producing small quantities are ok but big category-A site may not be possible at this juncture,' the source said.
According to the McKinsey report, ‘India’s petrochemical intermediate shortfall’, India needs to make petrochemical intermediates for products that its aspiring middle-class want.
The consultants estimate that demand for petrochemical intermediates will expand to 33MT to 28MT by 2025.
Recently, the Indian government imposed definitive anti-dumping duties on flexible slabstock polyol imports from two Middle Eastern countries,Saudi Arabia and UAE. These will be in place for five years to protect India's small polyol producers.
However, according to an executive of a leading foam brand, tariffs hit consumers by making products more expensive. 'Tariffs like anti-dumping duty increases the structural cost of the product, and other competitive materials get an undue advantage. Raw material prices are geography-dependent, and any such changes will impact the price for Indians.'
