Petrochemicals - Domestic Demand Robust, Margin Prospects Remain Muted Over FY24-26E: ICICI Securities

ICICI Securities Report

We attended an international petrochemical conference organised by Elite Conferences (in beginning of November 2023). Takeaways from the conference:

1. Global demand-supply balance remains skewed towards supply, with oversupply likely to persist for key sub segments.

2. Indian petchem demand may remain strong, but capacities in India are still skewed towards basic petrochemicals, which keep margins at the lower end.

3. Material capacity additions on the anvil in India, with ~5.2 million tonnes per annum of ethylene cracking in commissioning over CY23-26E and a further 3.8 mtpa of new crackers announced.

4. Polymer margins may remain lower over the next two-three years, driven by stronger capacity and relatively lower demand growth, specifically from China.

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