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Run-up to the Budget: Basic petrochemicals sector
Basic petrochemicals: State of the industry (2000-01)
- Demand for ethylene and propylene increased significantly, in line with the increase in polymer demand. Demand for butadiene, benzene and toluene also increased, though the increase was moderate.
- In 2000-01, capacity and production (and hence, supply) of petrochemicals increased significantly over those in 1999-2000, due to the commissioning of a new plant by Haldia Petrochemicals Ltd.
- Imports of basic petrochemicals declined due to an increase in domestic production.
- Exports of benzene and toluene increased significantly.
- In the first half of 2000-01, prices of petrochemicals increased significantly, due to high prices of feedstock, naphtha (and crude oil). However, in the second half of 2000-01, prices declined due to increased production of crude oil by OPEC, and the release of petroleum products by the US from its strategic petroleum reserves.
- In 2000-01, cracker margins declined over those in 1999-2000, due to high prices of crude oil and naphtha.
Basic petrochemicals: Industry expectations from the Union Budget (2001-02)
- A reduction in the special additional duty (SAD): The Indian Chemical Manufacturers' Association (ICMA) is asking for the removal of the SAD on feedstocks and petrochemical building blocks which are not normally traded (such as ethylene and EDC).
- A reduction in the import duty on feedstocks and petrochemical building blocks: ICMA is asking for the removal of the import duty on feedstocks, and the import duty on petrochemical building blocks to be reduced to 5 per cent.
- A reduction in the import duties on catalysts: ICMA is asking for the removal of import duties on catalysts which are not manufactured in India.
Basic petrochemicals: Prices and duties
Basic petrochemicals: Domestic and international prices, and landed cost
|
|
Tariffs |
|
per cent
|
|
Domestic prices |
International prices |
Landed cost |
|
|
1999-2000 |
|
2000-01
|
|
(Rs/tonne) |
($/tonne) |
(Rs/tonne) |
|
|
Customs |
Excise |
Customs
|
Excise |
Jan 2001 |
Jan 2001 |
Jan 2001 |
| Naphtha * |
5.0 |
16 |
5.0 |
16 |
10,860 |
259 |
12,909 |
| Ethylene |
16.5 |
16 |
21.2 |
16 |
31,500 |
443 |
28,348 |
| Propylene |
16.5 |
16 |
21.2 |
16 |
36,000 |
410 |
25,419 |
| Butadiene |
16.5 |
16 |
21.2 |
16 |
35,000 |
517 |
32,566 |
| Benzene |
16.5 |
16 |
21.2 |
16 |
23,000 |
371 |
24,774 |
| Toluene |
16.5 |
16 |
21.2 |
16 |
20,700 |
303 |
20,274 |
* International prices of naphtha are c&f Japan
Notes
1) Domestic prices are ex-factory prices.
2) International prices are fob Korea.
3) Special additional customs duty of 4 per cent was applicable on naphtha in 1998-99 and has been withdrawn in 1999-2000.
4) In the 1999-2000 Union Budget, MODVAT credit was enhanced from 95 per cent of the excise duty paid on inputs to 100 per cent.
5) For 2000-01, the landed cost and customs duty include the SACD of 4 per cent, effective since 1999-2000. In 1999-2000, the SACD was applicable only for non-traders, and hence, has not been included in the customs duty.
6) no surcharge is to be levied on naphtha.
Compiled by CRIS INFAC
Disclaimer: CRISIL has taken due care and caution in compiling this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of its web site.
Rediff-CRISIL Budget Impact Analysis
Budget 2001
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