INDUSTRY PROFILE

OF
HIGH DENSITY POLYETHYLENE (HDPE)
PRODUCTS
Pipes made from Polyethylene (PE) is a cost effective answer for a number of piping
problems in Metropolitan, Municipal, Industrial, Underwater, Mining, Landfill Gas
extraction, Cable duct and agricultural applications. It has been tested and proven
effective for underground, above ground, surface, under water as well as floating pipe
applications
Polyethylene pipes both High Density (HDPE) and Medium Density (MDPE) can carry
potable water, wastewater, slurries, chemicals, hazardous wastes, cables and
compressed gases as well as oils. Polyethylene pipes have a long and successful
service experience to the gas oil, mining and water utility industries. PE pipes have
the lowest repair frequency per Kilometer of pipe per year compared with all other
pipe materials used for urban water and gas distribution.

In January 2005 international prices of HDPE injection moulding grade and blow
moulding grade increased by US$22/ton to US$605-615/ton and US$625-635/ton
respectively. Prices of imported HDPE (CIF-India) were at US$620-630/ton. Margins of
stand alone producers increased by 13% to US$207/ton while the margins of
integrated HDPE producers also increased by 14% to US$300/ton. In the domestic
market the manufacturers maintained the general prices as of December 2004 at
Rs46, 300 per ton.
Production of HDPE declined by 16.8%yoy to 27841tons in December 2004.The
cumulative production of HDPE during April-December 2004 declined by 19.9%yoy to
248,000 tons. (Source:-indiainfoline.com)
General Characteristics

Plastics are known for lightweight, antirust & good insulation properties.
Role of plastics multiplied with rapid industrial development across the globe.
Plastics manufacturing process starts with refined fractions of oil (naphtha) and
or natural gas (ethane) that are "cracked" to manufacture monomers.

Plastics are organic high polymers consisting of large chainlike molecules

containing carbon

Indian Scenario

The country has an estimated production capacity of 4500 thousand metric

tons annually. Of this, 60-70% accounts for the production of polyethylene (PE)
and polypropylene (PP).
India with 4 Kg per capita consumption per year ranks eighth in the world
against world average of 20 Kgs & developed nations above 100 Kgs.

The industry demand is expected to touch 12.4 million tons by 2010-11,

becoming third largest consumer after US and China.

The polymer industry is growing at about 12-15% annually.

Over the last few years, the Indian Petrochemicals industry has witnessed
consolidation phase. The top players - Reliance, IPCL, Haldia Petrochemicals
(HPL) and GAIL - hold the majority of the polymer capacity in the domestic
market.

Buyers in the industry have very little bargaining power against the suppliers.

Buyers are all highly vulnerable to raw material prices, which are highly influenced by
international demand and supply conditions.
Government Policy

The government has considerably brought down the customs duty in the last
few years.
The GoI increased the foreign equity participation in the petrochemical industry
to 51%. Foreign firms have been allowed to set up 100% owned companies in
India in the plastics processing and other related sectors.

Need For Futures

There are whole lot of producers and buyers in the production and supply chain
whose business is highly dependent on the right price discovery of plastics.
With liberalized government policy in place, more number of players are
expected to enter, participate and grow in the polymer industry in the coming
days, resulting in higher demand for right pricing & price risk management.

Major uses of polymer products

Plastic Type
LDPE/LLDPE

Uses
Consumer packaging/film, extrusion wires,
cable coatings, etc.

HDPE

Pipes, Fertilizers, household packaging, woven

sacks, cartons, crates, luggage, etc.

Polypropylene (PP)

Cement packaging, monofilament yarn, ropes,

etc.
Water pipe, electrical wires, cables, sheets, etc.
Automotive tyres and tubes, conveyor belts and
footwear

PVC
Polybutadeine
Rubber (PBR)

Domestic Manufacturers

GAIL
GE Plastics India
Haldia Petrochemicals
IPCL
Karnataka Petrosynthese Limited
NOCIL
Reliance
Supreme Industries

Factors Affecting Plastic Prices

Changes in crude oil & natural gas prices

Economic growth of the major consuming countries such as US and China
Industrial growth and development
International consumption demand
Government policy changes

Price Volatility
The domestic polymer prices show high variation on a monthly basis. The instability
in domestic prices is principally attributed to wide variation in international prices
and the imported raw material prices. The monthly variation in the prices of polymers
recorded less than 2%, between 2-5% and more than 5% in about 34%, 28% and 38%
times respectively over the past two years. (Source:- Multi Commodity Exchange of
India Limited)