Investments in infrastructure pushing demand for PVC

Globally, plastics industry is one of the leading contributors to economic growth. In spite of recession and long-term consolidation trend, the plastics industry has been one of largest and fastest-growing industry sectors of the economy. In the second half of the 20th century, plastics emerged as one of the most universally-used and multipurpose materials in the global economy.
 
The plastics industry is the third largest manufacturing industry in the US, contributing significantly to the nation's economy. In Europe, plastics industry is stabilised from the recession and now moving towards growth. Competition in the industry is constantly growing and plastics market is increasingly shifting towards Asia especially to China and India.
 
Global plastic demand in 2013 was observed to be approximate 170 million metric tonnes (MMT). Asia having 43% share, which is expected to grow to 47% by 2021, when global plastic consumption is estimated to reach 250 MMT.

According to a study on plastics industry by Plastindia Foundation-India, with increasing usage of plastics in automobiles, consumer packaging and impact of increased infrastructure spending in India, the plastics industry is expected to continue double-digit growth beyond FY 2016.
 
The demand for plastics is also likely to double to about 20 MMT by 2021 from the current level of about 10 MMT. Packaging will be the largest sector of plastics consumption at 10 MMT by 2021 moving up from 6 MMT in 2013. Rising income levels and growing middle class will drive the demand for plastics in various end use segments like automobiles, white goods, healthcare etc.

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PVC market
PVC is the third largest in the plastic consumption globally. PVC industry in India is 5 decades old with establishment of first PVC plant in 1961. With introduction of various PVC products in 1970s, PVC consumption in country started doubling almost every five years. During 1985 - 1995, adoption of Green Revolution by the country resulted in increased usage of PVC pipes in the agriculture sector due to their superior performance. The consumption of PVC raised to 2 MMT by 2012 due to massive infrastructure development in the country during 2004 to 2012 and because of contribution of PVC to end use applications including pipes, conduits, wires and cables, doors, partitions and windows.

Currently PVC consumption in India is about 2.3 MMT against domestic production capacity of 1.3 MMT. This is leading to demand-supply imbalance resulting in imports of 1 MMT PVC resin in the country. It was observed in last few years that in spite of slowdown in economic growth, PVC consumption is growing with double digit. PVC demand is estimated to reach 4.5 MMT by 2020 with modest growth rate of 10%.
 
PVC consumption sectors
PVC is used in almost all end use sectors, viz agriculture, automobiles, building & construction, electrical and electronics, food and pharmaceuticals, sports & leisure covering applications such as pipes for total water management, profiles for doors and windows, wires and cables, food and medical packaging, blood and urine bags, catheters and tubing, films and sheets for wall covering, rainwear, flooring etc. Pipes & fittings sector has 70% share of PVC consumption in the country followed by calendered products at 9%, wire & cables at 6%, films at 5%.

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PVC which is known as infrastructure plastic has its growth linked to infrastructure development. Investments in infrastructure sector are creating opportunities for PVC products like pipes, floorings, doors and windows, wires and cables etc.
 
Growth in PVC pipe & fittings sector is observed due to the government focus on water and sanitation management. Pipe processors are investing in manufacturing of technologically advanced PVC pipes which have similar if not better performance qualities with cost advantage. Increase in land irrigational for food production is leading spur in demand from agriculture sector.
 
Green building concept is growing at very high pace and providing space for PVC products including PVC windows, wood PVC composite boards, floorings, etc. Though the concept of ‘Life Cycle Cost’ is not fully established in our country, the potential of PVC pipes and windows in conserving energy is being largely accepted. Thus, more and more builders have started using PVC windows in their projects. Government is working on spreading awareness about energy efficiency in the buildings through development of guidelines/codes such as Eco Homes, GRIHA code for new buildings. PVC products can certainly help earn star rating for the buildings.
 
Growth in pharmaceutical, FMCG and retail segment is creating demand for various PVC products like medicinal packaging, see through & food packaging, etc. Boom in electronics banking and transaction system as well as popularisation of mobile telecommunication is adding demand for credit/debit cards, mobile sim cards, etc. Advertising media is driving the white goods market in the country. PVC flex material is becoming a choice of advertising agencies due to cost effectiveness and good printability.
 
Infrastructure investment driving demand
A strong infrastructure sector is vital to the development of a country's economy. India's focus on infrastructure over the last decade made the country the second fastest growing economy in the world. In spite of the fact, our country is lagging in adequate infrastructure. To meet this challenge, India's planning commission has projected an investment of $ 1 trillion for the infrastructure sector during the 12th Five Year Plan.

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Investments in sectors such as water and sanitation management, irrigation, building & construction, power, transport, retail etc. is estimated to be about $ 450 billion. PVC plays important role in the sustainable management of these sectors through various products like pipes, wires & cables, water proofing membranes, wood PVC composites, food and medicinal packaging etc.
 
These huge investments in infrastructure will result in making India a hub for PVC product manufacturing. It is estimated that share of India in global PVC consumption will be increased to 8% (of 55 MMT) by 2020 from current 6% (of 39MMT).
 
Opportunities unlimited
It is observed that about 40% water is wasted during transportation due to leaks and breakages in aging pipelines. Products like weldable PVC pipes, expandable PVC pipe have the capacity to reduce the wastage by rehabilitation of these aging pipelines. Advantage of these products is that they can be used with trenchless installations without disturbing the existing pipeline.
 
On the other hand, damaged leaking sewer pipelines are contaminating ground water resources leading to the severe health hazards. PVC products like spiral wound pipe renewal system, fold and form PVC pipes can be used for rehabilitation of these old damaged pipes to increase the life of the sewer system.

Similarly products such as PVC windows and wood PVC composites are taking care of ecology and environment through reducing the demand for wood and wood based products. Forest cover in the country has reduced to 19% of total geographical area from 30% at the beginning of 20^th century. Wood PVC composites are considered as an option for wood and wood based products like plywood or particle boards for furniture applications as well as construction boards, tiles etc due to the superior water resistance. This industry is growing very fast in the country at the rate of 30%. There are many more applications yet to be emerged for wood PVC composites including decorative profiles, decking, outdoor furniture, etc.
 
Another innovative product for building and construction is PVC membranes for waterproofing. These membranes provide leak-proof system with easy and fast installation. These membranes also impart energy efficiency in the buildings by reduction of roof top heating. This product has huge potential in the country as waterproofing market in India is estimated to reach to $ 150 million by 2018. It is important to note that these membranes can be used for both residential as well as industrial waterproofing.
 
India is agriculture base country and is continuously improving the food grain production after Green Revolution. Food grain production increased to 253 MMT in 2013 from 241 MMT in 2011. Unfortunately available storage facilities of food grain cannot manage with this kind of production which is leading to food grain wastage to the tune of 20 MMT. PVC based food grain storage structures are beneficial in terms of handling and installation as well as they can be placed in open reducing the requirement of closed storage systems.
 
The structures are made gas tight through zip-lock type joint which gives perfect conditions for hermetic storage of food grains. Adoption of these structures can save precious resource – food grains with economical storage for long duration.
 
End of life: An important aspect of plastic industry
With consumption growth of plastics including PVC, it is very important to attend to the issue of ‘end of life’ stage. India is the leading country in the world where about 70% of plastics waste is recycled. Avenues like mixing of plastics waste in tar for road preparation, co-processing in cement kiln are being developed. Scientists have developed methods for fuel recovery from waste plastics. These methods are becoming promising options for plastics waste which is difficult to recycle.

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Technologies for manufacturing of biodegradable PVC films are under development, which can take care of waste generated from single use applications like medicinal packaging, medical devices, food packaging etc. After landfill, these films start degrading anaerobically to release carbon dioxide, water and chlorides (which act as a nutrient for plants). These films are becoming popular in western countries for various applications like advertising banners, food packaging etc.
 
Indian PVC fraternity is working towards bringing these technologies to India which will give different dimensions to the industry in coming years.
 
Conclusion
PVC industry is one of the major contributors to the economy of the country. With huge investments in infrastructure development, India will be the growth centre of the global PVC industry. PVC products have huge potential to curb the challenges faced by the country. Introduction of innovative technologies and products based on PVC will certainly make difference in the sustainable management of country’s infrastructure and economy.
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The author is the Senior Vice President - PVC Business in Reliance Industries Limited. He has worked in the petrochemical industry for over 30 years and has wide ranging experience in both domestic and international polymer business