Indian Acetyls Market Overview

William Gonsalves
 Market Overview
 Indian Acetic acid Market is 842kt in 2014, 82% accounted for by Imports
 Local Production 155kt by GNFC, rest met by Imports (687kt)
 Ethyl acetate, PTA and Acetic anhydride are the 3 Largest Derivatives accounting for 75%
of Acetic acid Consumption in India
 34% of Acetic Acid demand comes from Exports of immediate derivates + 2ndLevel
downstream
 Key downstream with sizeable share of Exports are Ethyl acetate, Acetic anhydride, MCA,
Glycol ether acetates, Pharma(Aspirin, Acetaminophen, Ibuprofen, Sulpha drugs), Crop
Protection Chemicals (2,4-D, Acephate, Coumaranone, Diketene), Food & Nutrition
(Caffeine, PVA), Personal Care (Betainesurfactants), Perfumery Chemicals
(OTBCHA/OTBCH), Reactive and Acid Dyes
 Life Sciences sectors constitute bulk of the Acetic acid consumption in India
 Acetic acid consumption declined by 1.8% over last year (857kt last year)
India Acetic Acid Consumption
Figs. in KT and %

2014-15 ~ 842kt (-1.8%)

India Acetic acid Consumption Declined in 2014
India Exports 2013 2014 Change
(MT) (MT)
Ethyl Acetate 214,388 149,747 -30%
Acetic Anhydride 52,151 76,872 39%
MCA 17,442 14,920 -14%

India Imports 2013 2014 Change

(MT) (MT)
Acetic Acid 700,326 687,208 -2%
VAM 148,198 148,832 0%
Butyl Acetate 39,203 48,628 24%

 Decline in Exports of Key Derivative (ETAC) Couldn’t be Offset by Growth in Acetyls

Consumption in Domestic
 India Ethyl Acetate Producers
Annual Mfg. Capacity 600000
Jubilant 120000
Laxmi Organics 120000
GNFC is the newest Godavari BioRefineries 120000
Entrant with a 50kt Dhampur 50000
New Plant, adding to GNFC 50000
Industrial Organics 40000
the already over-
Satyam Petro 40000
capacity in Ethyl Others 60000
acetate, in immediate
scenario India Production 2014 (Estimated) 418577
Exports 149747
Imports 267
Domestic Consumption 269097
 Ethyl acetate: Domestic Market Overview
Packaging and Inks Sector is the Largest Consumer of Ethyl acetate. Followed
by Pharma Sector. Almost 90% demand comes from these 2 sectors

Crop Protection Chemicals and Coatings are other key segments which
constitute for balance consumption of Ethyl Acetate in India

Both large consumption sectors (Pharma& Packaging) are driving growth and
have a good future due to relative inelastic demand

Packaging industry continues to grow due to demand from food & other
FMCGs. Organized retail supporting the production of Laminates, Adhesives

Steady Growth in Demand from Pharma

Ethyl acetate from India: Changing Global Landscape
 India is currently finding difficult to compete in Ethyl acetate exports

 New found viability of Ethylene-based Producers in Largest Deficit Marketsviz. Europe

and Japan (Ineos, Showa Denko)

 Falling ‘Euro’ Currency (fast moving towards Parity with US Dollar)

 Higher Import duty (2% to 5.5%) from Jan 2014 dealt a body-blow to ETAC
competitiveness.

 India Advantage over China dissipated with parity in import duty in Europe & higher
alcohol prices due to Mandatory Gasoline Blending

 Feedstock for other alkyl acetates are Cheaper than Ethanol

 Likely Demand Substitution of Ethyl acetate by cheaper Solvents like Toluene other
aromatic solvents

 Anti-dumping Duties in Korea Looming Large

 Low ocean freight provide succour

 India is now High-cost Producer of Ethyl acetate
Values in US$/MT
Direct addition (Ethylene + Esterification Process - India
Acetic acid) - Europe Costing
Description Unit Costing
Rate Norm Cost Rate Norm Cost
Ethylene US$/MT 960 0.37 355
Acetic Acid US$/MT 554 0.71 387 425 0.70 296
Ethyl Alcohol US$/KBL 635 0.73 463
Raw Material
742 758
Cost
Power KWH/MT 0.11 160 18 0.13 146 19
Steam MT/MT 18.0 3.3 59 25.3 3.2 81
Other Utilities 9 8
Utilities 86 108
Variable cost 828 866

Ethylene-based process is more competitive than Ethanol-based Ethyl acetate

 Ethyl Acetate World Exports
Reporting Country 2010 2011 2012 2013 2014 E % Change
China 284 374 414 422 437 4%
India 125 168 154 214 150 -30%
Mexico 114 114 113 121 126 4%
UK 96 85 130 109 114 5%
Singapore 80 79 79 83 87 5%
Brazil 57 51 43 43 32 -26%
South Africa 44 35 43 40 39 -1%
United States 25 21 24 25 21 -14%
Ukraine 19 18 19 20 16 -21%

India 2ndLargest Exporter Lost Significant Share of Global Trade in 2014

 Ethyl Acetate: India Exports
Region 2010 2011 2012 2013 2014E
Europe 68 125 96 153 94
South 16 57 28 35 27
North West 41 52 40 73 51
Turkey 11 15 27 45 15
Middle East/Africa 29 26 37 35 35
Middle East 11 9 15 10 9 Big Drop in Sales to
Africa 18 17 22 26 26 all key Markets –
Asia 9 10 17 23 18 EU, Turkey, Korea
Far-East Asia 3 6 9 11 5
South East Asia 0 0 2 2 1
Rest of Asia 6 4 6 11 12
America 1 1 2 3 2
North America 1 1 2 2 1
South /Latin America 0 0 1 1 1
Others 0 0 0 1 1
Russia 0 0 0 0 1
Total 107 162 153 214 150
 Ethyl Acetate: China Exports
Region 2010 2011 2012 2013 2014E
Europe 26 45 15 7 21 Qty. in kt
South 5 0 0 2 7
North West 13 26 8 5 6
Turkey 8 18 8 0 9
Middle East/Africa 24 31 26 9 30
Middle East 16 18 20 8 23
Africa 8 13 7 1 7
Asia 232 294 366 400 380
Far-East Asia 128 172 199 200 197
South East Asia 57 74 103 134 122
Rest of Asia 5 4 3 2 2
Taiwan 39 40 59 64 59
India 3 3 2 0 0
America 2 4 6 6 5
North America 0 0 1 0 1
South /Latin America 2 4 5 6 5
Others 0 1 0 1 2
Australia/New Zealand 0 1 0 1 1
Russia 0 0 0 0 1
Total 284 374 414 422 437
 Europe Imports of Ethyl acetate
Qty. in kt
Region 2010 2011 2012 2013 2014E
Middle East/Africa 17 13 16 33 49
Middle East 0 0 0 17 32
Africa 17 12 15 16 17
Asia 88 154 99 138 103
Rest of Asia 5 8 9 5 5
India 57 109 69 108 78
Ukraine 11 15 15 18 11
China 16 22 7 8 9
America 121 130 108 112 108
North America 1 2 0 0 1
Mexico 77 92 86 94 97
Brazil 43 36 22 18 10
Others 3 2 1 1 1
Russia 3 2 1 1 1
Total 229 298 224 284 261
Ethyl Acetate: UK Exports to Europe
Country 2010 2011 2012 2013 2014
Belgium 77 45 60 50 61
Italy 20 21 22 24 17
France 5 9 17 13 13
Spain 8 8 14 12 13
Switzerland 0.29 0.63 4.09 3.63 2.2
Germany 1.13 0.21 1.9 2.14 1.06
Ireland 0.82 0.59 0.22 0.2 1.18
Others 4.89 2.33 3.58 1.74 2.1
Total 118 88 123 107 110
 India Acetic Anhydride Market Overview
Annual Mfg. Capacity 148,100
Jubilant 90,000
India demand growth driven by Life
Laxmi Organics 12,000 Sciences Sectors – Pharma and Crop
Luna 30,000 Protection Chemicals (Paracetamol and
Industrial Organic 12,000 Acephate)

Andhra Sugar 1,300 Exports have more than trebled over last
Sanjivani 1,800 year , 96% of the quantities exported
from India are only to Europe
Trichy Distilleries 1,000

India Production 2014 (Est) 100,000

Exports 17,039
Imports 2,709
Domestic Consumption 85,670
Acetic Anhydride: India Market Segmentation

Acephate Perfumery Chemicals

Acetyl Chloride Reactive Dyes
Coumaranone Acid Dyes
2,4D (thru MCA)

Paracetamol
Aspirin
Caffeine
Diketene
Anti-viral Drugs
Cardio-vascular Drugs

2014-15 ~ 96000 MT
Acetic Anhydride: Exports Market Outlook

Europe remains as world’s largest deficit market for

Anhydride.

Closure of Celanese production in Europe followed

by Disruptions in BP production at Hull, UK led to
jump in India’s Exports in 2014

Weak Euro Currency and Volatility in Acetic acid

prices may not be helpful in sustaining market
share in Exports to Europe
 Pharma/ Paracetamol Segment View
Indiais2ndLargestParacetamolproducerafterChina,withAnn
ualCapacityaround71000MT–
KeyRawMaterialsbeingAceticanhydrideandParaaminophen
ol

IndiaShareofGlobalParacetamolProduction>115,000MTis3
2%~37000MT

ExportsarerisingduetoOutsourcingandduetoadditionalprod
uction&GranulationcapacitiesinIndia

HigherqualityperceptionoverChinaisleadinglargepharmaco
mpaniestooutsourcemorefromIndia
Paracetamol–Key Domestic Producers
Annual
Producer Capacity
(MT)
Granules 14000
India Share of Global
Farmson 12000
Sri Krishna 7200 Paracetamol Production is
Para Products 6000 32%
Meghmani Organics 6000
Alpha 6000
Others 20000
Total Capacity 71200
 Crop Protection /Acephate Segment View

i. Acephate–versatile broad-spectrum, slow-

acting insecticide, used against variety of
crops viz. Cotton, Pulses, Groundnut, Rice,
Vegetables

ii. World Market for Acephateis 43kt, growing

@4%. Key markets are Brazil, India, China,
Pakistan and US

ii. Producedin China and India –India share of

global Acephateproduction is 50% (22.5kt)
 Acephate - Major Producers
Figs in MT
Annual Mfg. Capacity 31,000
United Phosphorus 9600
Indian capacity utilization is
Rallis 6000 66%, against 40% utilization
Cheminova 4800 in China
Meghmani 3600
Sabero / Coromandel 2000
Others India 5000

Production2014 (Est) 19800 Indian Acephate Producers

Exports 3961 are Growing their Share in
Global Production
Imports 3477 (decreasing imports,
Domestic Consumption 19316 increasing exports)
 Stable Growth in India MCA Production
Producers Capacity in MT
CABB 24,000
S R Drugs 18,000
Low Plant Operating Rates
Meridian 16,000
Shree Chlochem 7,000 (59%) Fine Quality MCA, but
IOLCP 7,000 produced in environment un-
Anugrah 6,000 friendly batch-process,
Others 30,000 viability comes from cheaper
Total Capacity 108,000 Chlorine and competitive
Acetic acid in the region.
Domestic Production 64,000
Exports 14,920
Imports 1,000
Domestic Demand 50,080
 MCA : Tough Exports Market
Region 2,013 2,014
Europe 6,743 2,399 Facing tough time
South 6,157 1,604 against European
North West 586 795
Turkey 364 757
production
Middle East/Africa 1,886 3,574
Middle East 1,451 2,683 Tough Environment
Africa 435 892 in Exports to Euro
Asia 2,812 4,618
Zone
Far-East Asia 684 291
South East Asia 1,957 3,362
Rest of Asia 171 965
America 6,002 4,328
North America 4,072 1,526
South /Latin America 1,929 2,802
Total 17,443 14,920
 Butyl Acetate: India Imports

Qty - KT
Country 2010 2011 2012 2013 2014
Singapore 11,878 13,732 12,216 22,508 33,928
Malaysia 56 - 5,816 7,883 12,343
US 2,158 2,398 4,392 8,484 1,095
China 6,221 3,620 3,116 283 893
Taiwan 9,647 6,931 8,555 14 360
Germany 1,216 241 46 29 8
Total 31,177 26,922 34,141 39,203 48,628
 Conclusions
Growth in LifescienceSectors (Pharma, Crop Protection, Packaging) will drive
domestic consumption of Acetic acid.

Domestic Production likely get a boost from New Govt.’s campaign on ‘Make in
India’and likely lower import duties with progress in India-EU Free Trade
Agreement.

Some of the immediate downstream is vulnerable due to Excess Capacity in India of

many Acetic acid Derivatives

Feedstock volatility is a threat to the downstream, particularly in Acetic anhydride

PTA will be a major consumer of Acetic acid as new capacities get fully utilized

Continued weakness in Euro zone will adversely impact India Acetyls Industry

Ethyl acetate substitution by solvents like Toluene, MEK poses a very serious threat

Higher Production of Paracetamoland Acephatedue to Increase in Off-shoring by

Global PharmaCo’s is a Huge Positive