Features of the industry
Petrochemical
industry is a capital intensive and high volumes industry. The
minimum economic size of an integrated plant is around 1mn tpa of
end product which entails an investment of Rs100bn.
Petrochemical
industry is a cyclical industry. One boom cycle or recessionary
cycle takes around 5-7 years. To avoid the cyclical nature of
business, most of the big players have started setting up fully
integrated and global size capacity plants.
The industry is a
technology intensive industry. The obsolescence of technology is
quite rapid. Plants should have the adaptability to absorb new
technology and should be upgraded and/or modernized
constantly.
The demand for
petrochemicals is directly related with the economic growth of the
country. Polymers which drive 70% of the demand, have grown at 14%
in 90's i.e. by 2-3 times of GDP. The demand elasticity is high in
petrochemicals. With the fall in prices of petrochemicals the
demand increases and vice-versa.
