Post on 16-Apr-2017
INTERNATIONAL ECONOMICS
HS 3902: POLYMERS OF PROPYLENE
Section A Group 5
Abhay Sharma 1A
Aniruddh Srivastava 9A
Devansh Doshi 16A
Manasi Jain 23A
Sachin Gupta 38A
Vidooshi Joshi 55A
AgendaPolymers of Propylene
India’s Exports Trends
Export Markets
Import Markets
Global Markets
Important Markets for India
Export Strategies
Polymers of Propylene
Product390210 - Polypropylene, in
primary forms
390220 - Polyisobutylene, in primary forms
390230 - Propylene copolymers, in primary forms
390290 - Polymers of propylene or of other olefins, in primary
forms
Application
Packaging and labeling Textiles
Stationery Automotive Components
Loudspeakers Polymer Banknotes
Properties
Rugged Resistant to Chemical Solvents
Fatigue Resistant Mouldable
Flexible Lightweight
Production
Fractional Distillation
RILHPCL
IOC HPCLMajor Players
Industry Characteristics • High capital costs
• High energy costs
• Shortage of natural gas
• Lack of skilled manpower
• Low focus on end products exports
• Cyclical nature of business
6-8 years
India’s Exports Trends
India’s Export
2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
500000
1000000
1500000
2000000
2500000
3000000
611289.203
1978376.494
Expo
rt Va
lue
in U
SD 1
000
CAGR: 14%
Most of the growth has been seen in the last three years
Source: WITS
Key Export Drivers: Domestic Production
OPAL and BPCL investing in new
capacity development
2011-12 2012-13P 2013-14P 2014-15P 2015-16P 2016-17P0
1000
2000
3000
4000
5000
3650 3945 4295 4340 4521 4596
Production Pattern in India in kilotonsProd
uctio
n
Source: CPMAIExisting players planning for capacity
expansion
Expected increase in production
Source: CPMAI
Key Export Drivers: End UsersExisting High Volume Users
Automobiles Packaging
Upcoming High Volume Markets
Construction Medical Devices
Electricals Transportation
Long term growth
Key Export Inhibitor: Crude Oil Prices
Key raw material exposed to price volatility Source: Macro Trends
Key Export Inhibitor: Price Wars
Gulf Countries always enjoyed a price advantage Proximity to raw material
Alleged Government Subsidy
Source: Aljazira Capital
India contemplating on hiking import duty
India’s Declining Advantage
2.681.4
RCA in 2003 RCA in 2012
Need to keep a check
India’s Cost
Import duty of 7.5% able to protect Indian producers
2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
0.20.40.60.8
11.21.41.61.8
Cost (USD per kgm)
Export Import
Trade within HS 3902
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-200,000.00-100,000.00
0.00100,000.00200,000.00300,000.00400,000.00500,000.00600,000.00700,000.00800,000.00
Net Trade in 1000 USD
Polypropylene Propylene copolymersOther Polyisobutylene
Net exporter of ONLY polypropylene
Export Markets
India’s Export Trends: Top Markets
China
Turkey
Indon
esia
Vietna
mIta
lyBraz
il
Pakist
anNep
alIsr
ael
Portug
al0
50000100000150000200000250000300000350000400000450000
Top Export Market 2012
China has a major share in exports
India’s Export Trends: Top Growing Markets
Brazil
Nepal
Ukraine
Seneg
al
Korea,
Rep.
Ethiop
ia
Nigeria
Ghana
Cote d'
Ivoire
Portug
al0.00%
20.00%40.00%60.00%80.00%
100.00%120.00%140.00%160.00%
136.34%
100.34%83.02%
66.64% 65.07% 58.64% 55.42% 51.70% 49.39% 49.23%
Top Export Markets by Growth
Africa critical for growth in exports
India’s Export Trends: New Markets
Exports only in last three years
India’s Export Trends: Declining MarketsTop 40 percentile markets having negative CAGR
India’s Export Trends: High Trade MarketTop 20 countries based on TII in 2012
India is concentrating on Africa
Import Markets
India’s Import Trends: Top Markets
Saudi
Arabia
Korea,
Rep.
Singap
ore
United
Arab
Emira
tes
Thaila
nd
United
Stat
esChin
a
Kuwait
Japa
n
Netherl
ands
0
200000
400000
600000
800000
Top Importers 2012
In U
SD
India’s Import Trends: Top Growing Markets
Sri Lan
ka
Iran,
Islam
ic Rep
.
Kuwait
OmanIsr
ael
Poland
Sweden
Philipp
ines
Indon
esia
United
Arab
Emira
tes
137.91%112.06% 108.06% 103.82% 91.07% 83.99% 82.73% 77.50%
58.38% 56.04%
Top Growing Importers
India’s Import Trends: Top Growing Markets
Rise in imports from OPEC countries
Global Markets
Quick Numbers• Production capacity: 288 million tons• Capacity utilization: 90%• Expected CAGR till 2016: 4%
Source: Plastics Europe
Top World Exporters
Saudi Arabia’s rise is notable
Saudi Arabia11%
Belgium10%
Korea, Rep.9%
United
States
8%Euro-pean Union
7%
Germany7%
Sin-gapor
e7%
RoW40%
World Top Exporters in 2012
2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
1000000
2000000
3000000
4000000
5000000
6000000
Top Exporters
Saudi Arabia Belgium Korea, Rep.United States European Union GermanySingapore
Market Dynamics
Top Exporters have comparative advantage
Korea, Rep. Singapore Belgium Saudi Arabia0.00
1.00
2.00
3.00
4.00
5.00
6.00
3.17 3.19
4.37
5.72
RCA in 2012
Market Dynamics: Price Competitors• Gulf States want to become suppliers of end product• PP manufacturing capacities will more than double within the next five years.
• Domestic demand within the Gulf states continues to remain low
• Proximity to crude oil is an advantage • Competing in global markets with price
Market Dynamics: Developed World
Germany France USA0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1
1.41
1
RCA in 2012
Their comparative advantage is less
Market Dynamics: Innovation Competitors • North America and Western Europe will see a demise of PP manufacturing plants
• Market prices are higher as compared with China or Saudi Arabia
• Innovation in products becoming core competency
Top World Importers
China21%
Germany7%
Turkey7%
Italy6%
European Union5%Belgium
4%France
4%
Mex-ico4%
Others49%
World Top Importers in 2012
2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
9000000
Top Importers
China Germany TurkeyItaly European Union BelgiumFrance Mexico
Fragmented market led by developing economies
Important Markets for India
Top Markets based on Growth
Top markets: Growth in imports> India’s export growth
Key Focus Markets
Peru Pakistan
India’s Export share in World Top Importers: Trade Intensity Index
Indication of lack of competitiveness
ChinaGermany
TurkeyItaly
BelgiumFrance
Mexico
0
50
100
150
200
250
300
244.73
0.84
269.28
78.65
4.59
0 0.15
Key Focus Markets
Peru Pakistan France
Germany Mexico
Relative Comparative Advantage
Peru Pakistan Germany France Mexico Belgium China Turkey0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
0.07 0.01
1
1.41
0.14
4.37
0.07 0.11
RCA in 2012
Indication of lack of competitiveness
Key Focus Markets
Peru Pakistan France China
Turkey Germany Mexico
India has trade investment agreement with EUDuty reduced to 3% compared with 6% for MFN
Countries with zero RCA
Africa is the key
Export Strategies
Market Diversification Strategy
2008 2009 2010 2011 20120
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
0.2
0.0755
0.152
0.11670.1256
0.1795
HH Market Concentration Index
Increasing market concentration: keep a check
Analysing Market Share and Price
13.4
10.4
9.3
8.3
7.574.2
3.82.6
2.5
2.32.3
26.4
Saudi Arabia BelgiumKorea, Republic of United States of AmericaGermany SingaporeFrance NetherlandsThailand Hong Kong, ChinaTaipei, Chinese IndiaRest of World
Saudi
Arabia
Belgium
Korea,
Repub
lic of
United
Stat
es of
Ameri
ca
German
y
Singap
ore
France
Netherl
ands
Thaila
nd
Hong K
ong,
China
Taipei,
Chin
ese
India
0
500
1000
1500
2000
2500
Unit Price in USD per ton
Low share in world exports though price competitive India needs to expand production
Export Strategies
Expand Production
Develop innovative products
Compete with Gulf countries
Compete with North American and European
Countries
Expand Production
Subsidy on Capital Investments • Discount on purchase of machinery • Overcomes high capital costs
Trade Agreements• Seek FTA/PTA with the top countries
Developing Innovative ProductsPromote Joint Ventures
• Facilitates technology transfer
Incentivising Portfolio Diversification
• Capital subsidy given for expanding product portfolio