X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Petrochem: Dismal FY01 - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • May 21, 2001

    Petrochem: Dismal FY01

    Fiscal year 2001 and has not been very favourable for the petrochemical sector. Both polyester and polymer recorded disappointing growth rates. The fragmented industry structure and downturn in demand could ring the death knell for many players.

    In polyesters, the production of PFY is estimated at 817,600 metric tonnes per annum (MTPA) for FY01 a marginal growth of 3% YoY. Production of PFY has registered a 7% compounded growth (CAGR) over the last three years. However, there has been a YoY decline in growth over this period. PSF production for fiscal '01 is estimated at 566,500 MTPA. PSF has recorded an even lower growth of 2.7% YoY. However, the three-year CAGR stands at a higher 8.9%. The growth in PSF has also come down sharply over the last two years.

    In polymers, HDPE production declined by a staggering 17.7% YoY to an estimated 321,890 MTPA. The polymer has registered a negative CAGR of 3.6% over the past three years. LDPE production also suffered in the current fiscal but not to the same extent as HDPE. The production dipped by 1.7% YoY to an estimated 315,000 MTPA as compared a rise of 7.1% in FY00. The three-year CAGR for LDPE is a marginal 2.4%. PVC is the only key polymer to have recorded positive growth in FY01. Production of PVC rose by 4.5% YoY to an estimated 803,340 MTPA. However, the growth was much lower as compared to 30.6% registered in FY00. The three-year CAGR for PVC stands at 13.5%.

    The last couple of year has seen new polymer capacity come onstream. IPCL's gas cracker at Gandhar came onstream in FY98 followed by GAIL's 300,000 MTPA gas cracker at Pata, U.P in FY00. Haldia Petrochemicals Ltd. commissioned its 420,000 MTPA naphtha cracker in FY01. The strong growth in PVC production in FY00 could be due to commissioning of GAIL's gas cracker plant and stabilisation of phase -I & II of the Gandhar unit.

    The consumption growth, which drives production, also remained flat for FY01. The demand supply position for polyesters remained fairly equated at approximately 1.5 MMTPA. Demand for polymers, however, is estimated to have grown by 11% YoY.

    With demand for polyester lacklustre the prices also platued. Prices for POY remained at last year's level of approximately Rs 60.9 / kg while prices of PSF increased by an estimated 2.1% to Rs 53.5 / kg. Polyester intermediates, PTA and MEG, registered an estimated rise of 17.5% and 8% in prices to Rs 33.1 / kg and Rs 34.4 / kg respectively. Polymer intermediate -- polyethylene (PE) & polypropylene (PP) -- prices rose by an estimated 10% and 9.4% to Rs 46.9 / kg and Rs 41.1 / kg respectively. PVC price for FY01 was approximately Rs 41.2 / kg a growth of 8.3%. However, polymer prices weakened in 4QFY01.

    The rise in oil prices led to a substantial increase in naphtha prices, which is the key feedstock for downstream petrochemical products. Naphtha prices for FY01 is estimated at Rs 13,000 / MT. With oil prices skyrocketing, naphtha prices had touched Rs 16,000 / MT during the concerned period. However, with downstream product prices not registering a corresponding increase the operating margins of the industry came under pressure. The decline in oil prices and subsequently naphtha prices in 4QFY01 did provide some respite to the margins at the end of the fiscal.

    Structural weaknesses continue to dog the industry also fiscal '02 has not started on a good note as industrial production declined YoY. However, IPCL's disinvestment could be amongst the major event in the current fiscal.

     

     

    Equitymaster requests your view! Post a comment on "Petrochem: Dismal FY01 ". Click here!

      
     

    More Views on News

    Sorry! There are no related views on news for this company/sector.

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE OIL & GAS


    Aug 17, 2017 02:24 PM

    S&P BSE OIL & GAS 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS