Petrochemicals Introduction
Petrochemicals are derived from petroleum or natural gas. Naptha is also one of the substances that play an integral role in the production of petrochemicals. They are derived from hydrocarbons such as propane, ethane, butane, or other components separated from crude oil and natural gas liquids.

Petrochemicals define hydrocarbon-based compounds that are extensively used in the chemical industry. A manufacturing facility known as a cracker is used to produce petrochem products. After the crude distillation process, the separated hydrocarbons are fed to the hydrocracker. The cracker facilitates the breakage of hydrocarbon bonds which in turn allows the formation of useful chemicals. Thus the cracker serves as intermediate process equipment.

Ethylene is one such example, the monomer is used to produce polyethylene through the process of polymerization. Polyethylene plays an integral role in the plastic manufacturing industry.

Petrochemicals Market Outlook
Petrochemicals contribute to a major segment of the commodity chemicals market. Petrochem products have a vast value chain that includes verticals like clothing, tires, digital devices, packaging, detergents, and countless other everyday items. Thus petrochemical products play an integral role within modern societies.

As of 2022, it was recorded that petrochemical feedstock accounted for roughly 16% of the global oil demand. A rise in demand margins is expected owing to the growth in usage of consumer chemical products. This growth in margins is primarily due to the rise in purchasing power of the population.

Between the years 2019 and 2022, the petrochemicals market witnessed marginal growth owing to the increased demand for ethylene-based products. The annual production for ethylene rose from 100 million metric tonnes to roughly 150 Million Metric Tonnes between 2019-2022. Petrochemical company stocks have also performed well during the same period, as compared to other chemical products.

The high operating rates for the petrochemicals sector were majorly driven by the growth in the value chain for this market in Asia. Sub-regions like China and India have an expanding industrial sector which contributes to the expansion rate of the Global Petrochem market. Hence the petrochemical companies worldwide portrayed a buoyant margin due to the healthy demand. The demand for ethylene-based derivatives as well as C2 and C3 derivates adds to the burgeoning demand for petrochem products within Asia.

Petrochemical companies have benefited from manufacturing using low-cost gas feedstock as opposed to oil-based feedstock. Petrochemical Producers within regions like the Middle East and North America adopted this measure. In the case of North America, the shale oil reserves and the shale gas surplus within this market position this vertical advantageously. In the year 2014, crude oil prices hiked. Due to North America’s shale oil reserves, the market had a pronounced advantage in terms of the production for C1 and C2 derivatives.

The shale gas revolution within the United States has led to a growth in the North American Market. As of 2018, North America was home to 40% of the global ethane-based global petrochemical production.

In the year 2022, the industry suffered a margin loss across several products thus reducing its value created across the market. The margin erosion affected C4 and aromatic chains, This was predominantly due to the overbuilding by newer industry participants in emerging markets.

Petrochemicals Demand In Emerging Economies
The demand from emerging markets is one of the key drivers for the global petrochemicals sector. Substantial efforts are being made by countries like Europe, Japan, and South Korea to recycle plastic-based products. Although, the sustainability practices adopted by these countries outweigh the current surge in demand for petrochemicals across developing economies. The overall demand of this market is underpinned by the lack of suitable alternatives to plastic for certain operations.

Sustainability And Its Impact On The Global Petrochemicals Market:
Clean Energy Practices and their integration amongst Industry standards for petrochemical production is much debated within this market. Petrochemicals are regarded as one of the main blindspots within this Global Energy Debate. The role of petrochemicals in the Global Energy System is expected to increase.

The clean technology scenario associated with this sector is currently being explored by researchers across the world. Industries are trying to develop alternatives for petrochemical products like plastic which causes environmental degradation. The rise in awareness amongst consumers about the harmful effects of plastic on the environment is expected to serve as a key restraint for this market. Although, the continued research in this segment promises a suitable and sustainable future for the chemical industry.

Indian Agrochemicals Market in India accounts for a major share of the global market. After the United States, Japan, and China, India is the world’s fourth-largest producer of agrochemicals. The agrochemicals industry is a major industry for the Indian economy. In the year 2020, the Indian agrochemicals market was worth nearly USD 4.5 billion. Between 2021 and 2026, the market is projected to expand at a CAGR of 8.6%, reaching a value of nearly USD 7.4 billion. Indian agrochemicals market is a significant contributor to the Asia Pacific agrochemicals market’s growth. Due to the massive use of pesticides and fertilizers for farming activities, the Asia Pacific region is rising at the fastest pace globally. This is due to the region’s adoption of new and advanced farming practices.

The Asia Pacific area provides opportunities for both domestic and foreign businesses to expand. Farmers are now concentrating on investing in these crop-protecting and growth-boosting chemicals, following the recovery of the economy and the stabilization of regional currency prices. India, along with China and Japan, has the Asia Pacific region’s largest agrochemical markets. China is currently dominating the market due to its expanding agricultural sector, which is in line with the needs of the country’s increasing population. The country is both the largest producer and user of fertilizers in the world.

Agrochemicals are the chemicals used in agriculture to increase the amount of food generated from the soil. Pesticides, such as fungicides, insecticides, herbicides, and nematicides, are referred to as agrichemicals in different contexts.

The Indian agrochemicals market is driven by the country’s growing population, which has resulted in the country’s agricultural practices remaining sufficient. This has increased the use of Indian agrochemicals in agricultural activities. The industry has benefited from the Indianization of the agrochemical industry, which has boosted agrochemical product sales. Other factors influencing the Indian agrochemical industry’s growth include population growth, increasing food production needs, and economic growth.

Due to the increased impact of urbanization, the landmass available for agriculture is steadily decreasing as the demand for food products rises. Farmers are being encouraged to use various agrochemicals to improve land productivity and preserve soil quality. The country’s positive trend and integrating farming practices are expected to boost the growth rate of the agrochemicals sector. However, low knowledge of the benefits of agrochemicals among farmers, as well as their low acceptance of modern-day farming practices, can stymie the market.

India’s agrochemical intake is among the lowest in the world, at 0.58 kilograms per hectare, compared to 4.5 kilograms per hectare in the United States and 11 kilograms per hectare in Japan. Paddy accounts for the majority of pesticide use in India, around 28%, followed by cotton using 20%. Since India’s population is growing and land per capita is shrinking, pesticide use in the country must increase. In addition to rising domestic consumption, the Indian agrochemicals industry’s exports could double in the coming years. Proper strategies and sophisticated technologies need to be implemented to increase Indian agrochemicals exports.

Agrochemicals industry structure

There are approximately 125 technical grade manufacturers in India, 800 formulators, and more than 145,000 distributors. In-house development of 60 technical-grade pesticides takes place in the country. Formulators buy high-purity chemicals in bulk from technical-grade manufacturers. In exchange, formulators prepare formulations by incorporating inert carriers, solvents, surface-active agents, deodorants, and other ingredients. Farmers purchase these formulations, which are packaged for retail sale. Low-capacity utilization characterizes the Indian agrochemicals sector. In 2019, the total installed capacity was 146,000 tonnes, while the total output was 85,000 tonnes, resulting in capacity utilization of only 58%.

Due to seasonal and erratic demand caused by monsoons, the agrochemicals industry has a high inventory. Long credit terms for farmers are also common in the industry, making operations ‘working capital’ intensive. India is a net exporter of pesticides to countries such as the United States along with some European, Asian, and African countries. A large number of exports as a result of its inherent strengths of low-cost production and skilled low-cost manpower. The exports in the year 2019 accounted for nearly 50% of the turnover generated by the agrochemical sector.

Key players

With over 800 formulators, the Indian agrochemicals sector is highly fragmented. With several coordinated sector players and a considerable share of bogus pesticides, competition is fierce. Large players have been buying out small producers in the industry, resulting in mergers and acquisitions.

United Phosphorus Ltd, Bayer CropScience Ltd, Rallis India Ltd, Gharda Chemicals Ltd, Syngenta India Ltd, BASF India Ltd, and others are key market players. Nearly 80% of the market is controlled by the top ten firms. Large players’ market share is largely determined by their product portfolio and the launch of new molecules. To minimize risks and serve a wider customer base, strategic alliances with competitors are popular.

Key challenges for the Indian Agrochemicals sector

The agrochemicals sector faces several challenges. It takes nearly 9 years of research and development to manufacturing a new agrochemical molecule. Several Indian agrochemical firms have neglected to invest in the creation of new molecules. As a result, they will face challenges in developing these capabilities while remaining cost-effective. Genetically engineered seeds have self-immunity against natural enemies, which could have a detrimental effect on the agrochemical industry. Since there are so many end consumers, successful distribution to retailers is critical to ensure product availability. Companies have recently been dealing directly with consumers, removing the distributor from the supply chain. This is done to reduce delivery costs, educate retailers on product consumption, and give farmers fair prices. The Indian government and NGOs are promoting IPM, zero-budget planting, and the use of bio-pesticides. Farmers in some states, such as Karnataka, have reduced chemical use and switched to organic farming in response to the rising demand for organic food. Agrochemical companies will have to deal with increasing environmental consciousness and concerns about pesticide use’s negative effects.