India’s Petrochemical Sector Maintains Growth Amid Global Headwinds

Key Highlights:

1. Price Trends: Refinery Bitumen (VG30) at ₹47,352/MT in Panipat, Base Oil (N150) at ₹67.5/L in Delhi.
2. India’s Demand Strength: Annual consumption of 25-30 million metric tons expected to grow further.
3. Global Market Challenges: Oversupply from China & Middle East putting pressure on margins.
4. Major Investments: $87 billion planned for India’s petrochemical industry in the next decade.
5. Future Outlook: Growth remains strong, with price stability contingent on China’s policy decisions.

Petroleum Price Update: Key Market Rates Across India

• Refinery Bitumen (VG30) is priced at ₹47,352 per metric ton in Panipat, while Roadgrip Bitumen Emulsion (RS 1) stands at ₹33,810 per metric ton in Mathura. 
• In Delhi, Base Oil (N150) is available at ₹67.5 per liter, and Lubriedge Rubber Process Oil (Paraffinic 245) is priced at ₹72 per liter. 
• Fuel Oil (Virgin 180cST Furnace Oil) in Mundra costs ₹48.5 per kg. 
• In Bhiwadi, LubriEdge Hydraulic Oil (68) is ₹87 per liter, LubriEdge Gear Oil (150) is ₹115 per liter, and LubriEdge Rust Preventive Oil (Water Displacing Type) is the highest-priced at ₹122 per liter.

Demand and Supply: India’s Growing Petrochemical Market

• India remains a bright spot in the global petrochemical market, driven by strong domestic demand across key sectors such as electric vehicles (EVs), solar panels, and household appliances. 
• Despite a global oversupply and weak margins, the resilience of India’s economy, coupled with increasing consumption in the automobile and infrastructure segments, is expected to sustain petrochemical growth in 2025.
• The country's annual petrochemical consumption stands at approximately 25–30 million metric tons, with further expansion anticipated. Major domestic refiners such as Bharat Petroleum and Indian Oil are capitalizing on this demand surge, particularly in the propylene segment. 
• India’s refinery-integrated petrochemical facilities have a significant advantage over standalone plants due to in-house feedstock production, mitigating cost pressures associated with imported raw materials.
• However, the global petrochemical sector faces challenges from China and the Middle East, where capacity additions have led to excess supply. China’s economic slowdown and fluctuating industrial activity have resulted in weaker petrochemical demand, further exacerbating margin pressures. 
• Industry experts are closely monitoring China’s upcoming incentive plan, set for March 2025, which could provide a much-needed boost to global demand and stabilize pricing trends.
• Despite these challenges, India's petrochemical sector is set to receive substantial investments, amounting to $87 billion over the next decade. 
• Major projects, such as Petronet LNG’s Gujarat-based propane dehydrogenation unit and polypropylene facility, signal a bullish outlook for India’s production capabilities. The industry is expected to reach a market value of $300 billion by 2025, reinforcing its significance in the global supply chain.

Global Challenges: Oversupply and Margin Pressures

• Indian Petrochemical Market Gains Strength: With India’s robust domestic demand, key players such as Bharat Petroleum and Indian Oil report steady sales, particularly in polypropylene and polyethylene segments.
• Petronet LNG Expands Operations: The company is developing a 750,000 metric tons/year propane dehydrogenation unit and a 500,000 metric tons/year polypropylene plant in Gujarat, aimed at strengthening India’s self-sufficiency in petrochemical production.
• Global Oversupply Puts Pressure on Margins: New petrochemical plants in China and the Middle East continue to add excess capacity, leading to suppressed margins. The industry is awaiting China’s March 2025 policy updates to assess potential demand recovery.

Market Outlook: Stability Hinges on China’s Policy Decisions

• Despite global headwinds, India's petrochemical industry is expected to maintain its growth trajectory, supported by sustained domestic demand and strategic investments. 
• While global margins may take up to three years to recover, India’s refining advantage and increasing consumption in key sectors provide a stable outlook. Industry stakeholders anticipate price stability in the medium term, contingent on China’s policy direction and broader economic recovery trends.