India is expected to be a bright spot for petrochemical demand in 2025, even as global consumption struggles to keep pace with supply.
Industry executives at the India Energy Week conference highlighted increasing demand for electric vehicle parts, solar panels, and household appliances as key growth drivers.
Sanjay Khanna, Director of Refineries at Bharat Petroleum Corporation Limited (BPCL), noted robust local demand, particularly in the propylene sector where the company operates.
Similarly, Indian Oil Corporation Limited (IOC) Chairman A.S. Sahney expressed confidence that demand will remain strong throughout the year.
Growing Applications for Petrochemicals
Petrochemicals play a vital role as building blocks for a range of essential products, including plastics, paints, and pharmaceuticals. Ganesh Gopalakrishnan, Global Head of Petrochemical Trading at TotalEnergies, highlighted strong demand from the automobile sector and a recovering market for white goods.
Global Petrochemical Margins Under Pressure
Despite positive trends in India, global petrochemical margins are expected to remain weak for the next few years.
This is due to sluggish demand from China, the world’s largest petrochemical consumer, and an oversupply caused by new production facilities in China and the Middle East.
“The industry is eagerly waiting for China to announce its major incentive plan in March,” said Gopalakrishnan. He believes that if China unveils significant incentives, it could stimulate demand and improve global petrochemical margins.
Indian Refiners Stay Resilient
Indian refiners have managed to stay insulated from losses by producing their own petrochemical feedstock, particularly naphtha.
However, standalone plants that rely on imported feed have faced negative margins for the past three to four years, according to Pankaj Srivastava, an analyst at consultancy Rystad Energy.
Significant Investments in India’s Petrochemical Sector
India continues to attract substantial investments to meet rising petrochemical demand.
In 2024, oil minister Hardeep Singh Puri announced that India would receive $87 billion in petrochemical investments over the next decade.
He also revealed that India consumes 25 to 30 million metric tons of petrochemical products annually, and the sector’s value is projected to grow from $220 billion to $300 billion by 2025.
Major companies are already expanding their production capacities. Nayara Energy and Haldia Petrochemicals have announced plans to increase output.
Additionally, Petronet LNG is developing a large petrochemical complex in Gujarat. This facility will include a 750,000 metric tons-per-year (tpy) propane dehydrogenation unit and a 500,000 tpy polypropylene unit.
Optimism for Future Margin Recovery
Despite the current downturn, industry leaders remain optimistic about future recovery.
“The downturn in petrochemicals has always been cyclical. We expect margins to recover within the next three years,” said Petronet LNG’s Chief Executive, Akshay Kumar Singh.
As reported by reuters.com, India is experiencing strong domestic demand and significant investments. This puts the country’s petrochemical sector in a strong position to thrive. Meanwhile, global markets continue to face ongoing challenges.
