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 chain like 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 

Domestic Manufacturers 

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

International Manufacturers 

• Exxon Mobil.
• Honam Petrochemicals.
• Hyndai Petrochemicals .
• Samsung.
• Shell.
• Dow Chemicals .

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.