Ken Research: Evolving Methanol Production and Phenol Demand is Expected to Propel the India Organic Chemicals Market

Organic chemicals have been majorly produced by using Naphtha and Natural Gas as feedstock. The wide application of organic chemicals triggered their demand which was not met by domestic production in the last five years. This demand-supply gap has been bridged by the cheap imports from China, Middle East and Africa. The consumption has increased at the CAGR of 5.5% from FY’2009 to FY’2014, on the other hand, the production of organic chemicals lagged behind at a CAGR of 3.8% in the same time period. This time frame has also witnessed the growth in imports by value at the CAGR of 21.6%. The local production of methanol has inclined at the CAGR of FY’2009 FY’2014. Hence, the amount of imports of methanol in India bolstered at a CAGR of 22.1% during the review period. The wide application base of methanol has triggered its import to India.

Poor infrastructure, high cost of feedstock and under-utilization of installed capacities have acted as a major hurdle in the achievement of optimum operational capacities of plant and machinery. Ensuring feedstock availability, stringent government regulations against cheap imports, skilled manpower and innovating new applications of organic chemicals are the major factors that would drive the growth of this market in the next five years. Inconsistent policies of the government have been continuously gripping future growth prospects in the industry. The wide application base of the organic chemicals laid the vital growth opportunity to grow for the overall chemical industry.

There was a continuous increase in the consumption of organic chemicals from FY’2009 to FY’2014. Indian organic chemical industry suffered its downturn in FY’2010 due to global economic slowdown in FY’2009 which distressed the manufacturing sector. The contribution of end users industries (such as construction and automobile sector) dropped by 4%-5% as compared to FY’2008. The index of the industrial production increased at the CAGR of 3.4% from FY’2009 to FY’2014. As the global economy was recovering from its recession the consumption growth rate increased by 4.8% in FY’2011. Highest increase in consumption was seen in FY’2012 because there was a massive growth in demand of methanol by 25.8%, primarily from the formaldehyde and pharmaceutical segments. The consumption had been growing at the CAGR of 5.4% during FY’2009 to FY’2014.

The growth in India Organic Chemical Market plays a pivotal role in supporting the expansion of other industries in India. The production in organic chemical industry has witnessed growth at a CAGR of 3.8% during the period FY’2009-FY’2014. Owing to this sizeable growth, the Organic Chemical Industry has been one of the fastest growing Industries in India. Organic chemicals are extensively used in water treatment chemicals, construction, personal care products and automotive sector