Inorganic chemicals: On the expansion trail
India ranked 6th among leading importers of inorganic chemicals, while it ranked 17th among the leading exporters. The industry is expecting strong growth headwinds in the coming years due to the growth in end-use industries like glass, automotive and paints.
- Between 2009 and 2019, trade of inorganic chemicals has experienced a structural change, as indicated by the relocation of the market from Europe to Asia.
- During 2018-19, India’s total imports of inorganic chemicals amounted to Rs. 7,112.86 crore and total exports stood at Rs. 2,137 crore.
- In 2018-19, the share of alkali chemicals in the total production of inorganic chemicals in India was 88.32%. During the same period, the share of alkali chemicals in the consumption of inorganic chemicals was 78.12%.
- In the global market, India has price competitiveness in potassium chlorate and titanium oxide with unit values of US$ 1,060 per ton and US$ 1,350 per ton, respectively.
Inorganic chemicals, by definition, are chemicals, which do not include carbon and its derivatives as principal elements. Some of the end-use industries which use these chemicals are the paint industry, glass industry,
automotive industry, detergent and soap industry, and paper and pulp industry. These chemicals can be classified into two sub-segments: alkali chemicals and basic inorganic chemicals. The chemicals that come under these sub-segments are as follows:
- Soda Ash
- Caustic Soda
- Liquid Chlorine
Basic inorganic chemicals:
- Aluminium Fluoride
- Calcium Carbide
- Potassium Chlorate
- Titanium Dioxide
- Red Phosphorus
- Hydrogen Peroxide
- Calcium Carbonate
Globally, trade of inorganic chemicals has experienced a structural change over the past decade. Asia and Europe have been the largest contributors in import and export of this sector. However, their contributions in global trade of inorganic chemicals have changed significantly between 2009 and 2019. As the figure below shows, in 2009, the shares of Asia and Europe in world export of inorganic chemicals stood at 26.43% and 41.22% respectively.
By 2019, the share of Asia has increased to 37.8%, while that of Europe decreased to 32.94%. Similarly, in case of imports of inorganic chemicals, during 2009 to 2019, the share of Asia has increased from 31.9% in 2009 to 41.79% in 2019. On the other hand, share of Europe has reduced from 41.58% in 2009 to 33.31% in 2019.
Source: UN Comtrade, figures in %
According to 2019 data, China, USA, and Germany are three leading exporters as well as importers of the inorganic chemicals.
India’s trade of inorganic chemicals
In 2019, India ranked 6th among leading importers of inorganic chemicals, while it ranked 17th among exporters. Figures below give a better picture of India’s trade in inorganic chemicals. During 2018-19, India’s total imports of inorganic chemicals amounted to Rs. 7,112.86 crore and total exports stood at Rs. 2,137 crore. In comparison to 2011-12, the imports of both alkali chemicals and basic inorganic chemicals have increased. However, the exports during 2011-19 show India’s export revenue has increased in case of alkali chemicals while have decreased for basic inorganic chemicals.
Source: Department of Chemicals and Petrochemicals, figures in Rs. Lakh
Source: Department of Chemicals and Petrochemicals, figures in Rs. lakh
Domestic production & consumption
India is the 6th largest chemical producer in the world and share of inorganic chemicals is 1/3rd of its total chemical production.
In 2018-19, total production of inorganic chemicals in India was 9,106.48 thousand MT. In this, the share of alkali chemicals is 88.32% and basic inorganic chemicals account for the rest of the share in total production. Looking at the chemicals individually, soda ash is the most produced chemical with a production of 2,410 thousand MT in 2018-19. Among the basic inorganic chemicals, carbon black has the highest production of 447 thousand MT during 2018-19.
|Table 1 Domestic production of inorganic chemicals|
|Major groups / products||Production||CAGR (%)|
|Basic Inorganic Chemicals|
Source: Department of Chemicals and Petrochemicals, figures in 000’ MTSheet 4-Graph 1
The consumption of inorganic chemicals in India was 11,319 thousand MT during 2018-19. During 2011-12, the consumption of inorganic chemicals stood at 7,837 thousand MT, increasing at a CAGR of 5.39% during these 7 years. When you look at the total consumption of inorganic chemicals in 2018-19, share of Alkali chemicals stood at 78.21%. The most consumed alkali chemical is Soda Ash, while the most consumed basic inorganic chemical is calcium carbonate.
|Table 2 Domestic consumption of inorganic chemicals|
|Consumption of selected major chemicals|
|Basic Inorganic Chemicals|
Source: Department of Chemicals and Petrochemicals, figures in 000’ MT
According to 2019 data, India has price competitiveness in potassium chlorate and titanium oxide with unit values of US$ 1,060 per ton and US$ 1,350 per ton, respectively. The unit value of India in both of these chemicals is less than some leading exporters of the chemicals.
A look at the production, consumption and trade of inorganic chemicals, together gives following observations:
- The imports and exports of carbon black have a significant share in total imports and exports of inorganic chemicals for India. In 2018-19, the imports of carbon black amounted to Rs. 249,368 lakh while exports of carbon black amounted to Rs. 103,643 lakh. This shows a gap between domestic demand and supply. The consumption of carbon black in 2018-19 amounted to 702.09 thousand MT and production amounted to 546.39 thousand MT.
- Similarly, exports and imports of caustic soda are close in terms of values. In 2018-19, the imports of caustic soda amounted to Rs. 79,927 lakh, whereas exports of the chemical amounted to Rs. 71,663 lakh. India imports caustic soda in liquid form with the imports of aqueous solution of caustic soda amounting to Rs.62,401.77 lakh in 2018-19.
Furthermore, the exports of caustic soda from India are in solid form, with exports of solid sodium hydroxide recorded at Rs. 70,349.34 lakh in 2018-19. This implies that the chemical gets processed from liquid form into solid form, which to a great extent, explains the similar values of imports and exports.
Growth in the industry is aided by supportive policies such as 100% FDI, incentives for R&D, setting up of dedicated infrastructure in four states and de-licensed manufacturing of most chemical products. Furthermore, growth in end user industries also drives the growth in the inorganic chemical industry. The flat glass market of India is expected to grow at a CAGR of 8% between 2020 and 2025 due to increase in demand from the infrastructure and construction industry. The automotive industry of India is expected to become third largest in the world by 2026. Paper industry, which uses caustic soda as raw material, is expected to grow at a CAGR of 7.4% during 2019-24.
The above information is sourced from a report on the Inorganic Chemicals industry prepared by Centre for Advanced Trade Research, the research division of TPCI. To view the report, click here.