DEVELOPMENT IN THE INDIAN MARKET FOR PLASTICS ANDREW REYNOLDS, RESEARCH DIRECTOR AMI CONSULTING
Contents
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Introduction
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The economic environment
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Where the Indian continent fits in the world
•
Dynamics of the market
•
Characteristics of the Indian market –
Polymer demand
–
Structure
•
Market trends
•
Conclusions
Introduction: about AMI •
Market Analysis: in-depth multiclient reports
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The Global market for BOPP film The Global market for Stretch film The Global market for Grass Yarns
Feasibility studies Technical and commercial due diligence Strategic analysis/business development Customised market research
E-magazines
Sector oriented (e.g. Orientate BOPP) Free-to-reader (at www.amiplastics.com): Compounding World Injection World Film & Sheet Extrusion Pipe & Profile Extrusion –
–
–
–
Conferences and Seminars
Single client services
•
•
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Middle East Plastic Pipes, May 15-16, 2012, Dubai Flexible Packaging Middle East, November 13-14 2012, Dubai The Plastics Industry Strategy Seminar, November, Mumbai 2012
Database products
Thermoplastics Compounders Polyolefin film producers Injection moulders Blow moulders Pipe producers Rotational moulders
Raw material flow for plastics Pigment & Additive Producers
Chemical synthesis
Compounding
Resin Producers
Toll Masterbatch producer
Merchant masterbatch producer
Merchant Compounders
Res in Producer Compounders
Processor Compounders
Plastics fabrication
Toll Compounders
Formulated Compounds
Processors Injection Molding
Raw materials
Blow Molding
Film Extrusion
Pipe & Profile Extrusion
Fiber Extrusion
Fabricated products Other
The economic environment
The IMF details a strong GDP performance in the whole Indian sub-continent Prospects remain bright in the medium term 2010
2011
2012
India
10.1%
7.8%
7.5%
Pakistan
3.8%
2.6%
3.8%
Sri Lanka
8.0%
7.0%
6.5%
Bangladesh
6.4%
6.3%
6.1%
In this environment and with a population of over one billion plastics conversion has moved ahead strongly
Position of the Indian continent in the world India 5%
Rest of World 95%
The world market is 214 million tonnes
Plastics world: Per Capita vs. Population 100.0
NAFTA 80.0
) 60.0 g k ( d n a m e d 40.0 a t i p a c r e P 20.0
Europe China Asia Indian Subcontinent
Latin America Middle East & Africa
0.0 0.0
-20.0
200.0
400.0
600.0
800.0
1000.0
1200.0
Population (millions)
1400.0
1600.0
1800.0
2000.0
Plastics world: Per capita & growth 12.0%
10.0% Indian Subcontinent China 8.0%
6 1 0 2 1 1 0 6.0% 2 R G A C
Latin America
Asia Europe
4.0%
NAFTA Middle East & Africa
2.0%
0.0% 0.0
10.0
20.0
30.0
40.0 50.0 60.0 Per capita demand (kg)
70.0
80.0
90.0
100.0
The World 1983 and 2011 2011
1983
Africa and the Middle East 8.4% Indian Sub
Africa and the Indian Sub Middle East Continent 4% 1% Asia 17%
Continent 4.9% Europe 38%
Europe 21.4%
Asia 14.7%
Greater China 6% Greater China 27.9%
Latin America 4% NAFTA 30%
44.8 million tonnes
NAFTA 17.8%
Latin America 4.9%
213.8 million tonnes
Dynamics of the Indian Sub Continent market
The subcontinent is dominated by the Indian market which in 2011 continued to grow but a lower rate than that seen in the last five years
Growth in India has been rapid since the economic reforms championed by Narasimha Rao and Manmohan Singh in the 1990’s
Indian development has been assisted by the growth of resin availability following the establishment of global scale plants by Reliance Industries
Local demand has so far been primarily driven by local domestic demand rather than any export focus
Processors increasingly looking at the global opportunity
Demand patterns are often focussed on solutions tailored to a relatively low income groups (significant sales of single unit pouches etc..)
Significant opportunity exists to replace traditional materials
Global polymer growth by region % p.a. Europe
2.9%
NAFTA
2.7%
Latin America
5.3%
Greater China
7.8%
Asia
4.5%
Indian Sub Continent
10.2%
GCC 0.0%
7.9% 2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Evolution of the Indian industry •
•
The polymer industry in the Indian sub continent has always been highly entrepreneurial and expansive Early development was based on: – – –
• •
Evolution of conglomerates active in a number of processes Recent years have seen the development of more stock market quoted companies, expanding more rapidly via the availability of wider capital sources Fibers BOPP Wire and Cable PET film Processing remains fragmented with over 30,000 operating companies – – – –
•
Thermoset producers making the move into thermoplastic material Textile groups investing in polymeric alternatives Traders and small merchants diversifying into new business (often encouraged by government focus on “small industry” and the need for changing share ownership)
Polymer demand in the Indian continent 2011 Bangladesh 1% Other Indian Sub. Sri Lanka Contineint 1% 0% Pakistan 9%
India 89%
Demand is 10.4 million tonnes
Per Capita vs. Population 120.0
100.0 Germany 80.0 ) g k ( d n a m e d a t i p a c r e P
60.0
40.0 India
Sri Lanka 20.0
Other India Pakistan Bangladesh
0.0 -200.0
0.0 -20.0
200.0
400.0
600.0
800.0
Population (millions)
1000.0
1200.0
1400.0
1600.0
Per Capita & growth
The plastics industry Indian Sub Continent
Highly fragmented industry in all the countries –
Entrepreneurial flair
–
Poor logistics
–
Bureaucracy at state and national government level
Many companies but limited resources –
Most companies privately owned
–
Companies run from the top down with a thin management structure
Industry structure –
Most markets remain national
–
High level of trade barriers between nations (but levels are declining)
–
Increasingly aware of global developments
Specialisation increasing in all sectors
End use applications for polymers Sport and Leisure 0% Housewares Toys Furniture 2% 2% 1% Medical 0% Electrical Appliances 2% Automotive 2% Agriculture 1%
Flexible Packaging Industrial 8% Others 11%
Flexible Packaging Consumer 23%
Building 24% Rigid Packaging Consumer 18%
Rigid Packaging Industrial 6%
Distribution of polymer processors Cable Producers Sheet Extruders Thermoplastic 0% 1% Compounders Profile 3% Extrusion Other Processors 1% 2% Pipe Extrusion 6%
Polyolefin Film 13% Rotational Moulding 1% Blow Moulding 7%
Injection Moulding 66%
Over 30,000 processors
Distribution of plastics processing in India South 21% West 43% East 8%
North 28%
Structure of the Indian plastics industry
Quoted Companies (17% of Quoted demand) Companies Ca. 50
Ca. 700
Ca. 30,0000
(17% of demand) Limited Companies Companies (24% of Limited demand) (24% of demand) Family owned/small Family (59% of demand) owned/small (59% of demand) Sli
Concluding remarks •
The Indian sub continent is a dynamic and fast growing market driven by: –
–
–
–
•
Opportunity is driven by: –
–
–
–
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Entrepreneurial culture Availability of investment capital Young population (under 30’s are around one third of the population) Awareness of the global opportunity Over a billion people with a high degree of education and increasing disposable income Car production increasing from 2.5 million units to 15 million units Infrastructure improvements (building) Improving food production
Investment is a two way street –
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Indian companies going global (e.g. Flex Industries, Motherson Summi, Jain Irrigation, Essel Propack) International companies locating in India (e.g. Ampacet, Alcan, A. Schulman)
Sli
Thank you Andrew Reynolds, Research Director AMI Consulting
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