Polymers :With this background and depending on the feed stock used, we could logically divide the polymer producers in the following broad categories:

	Those who depend on supplies of ethylene and propylene from other merchant producers. With the current capacity limitations in ethylene and its high prices, these producers will be forced to operate at minimal or unviable margins, inspite of the high polymer prices. There are forty such plants in the Asia-Pacific region alone. It would not be surprising to find some of these plants shut temporarily, further aggravating the supply situation.
	U.S. and European polymer producers who rely on gas or naphta for their feed-stock will probably have a little more comfort in their operating margins.
	Polymer producers with integrated crude oil refining capacities. We have seen their margins and profitability on the rise in the present situation. There is a large section of Processors who believe that protection through 20% import tariff on Polymers, extended to local producers is no longer necessary. India is a net exporter of Polymers. Exports have grown last year by 28% and are valued at US $ 505 million. (approx 730,000 tons).
	The Middle East producers based on ethane gas. They are positioned to reap rich rewards, and best placed to expand capacities.

The last cyclical down-turn in polymers lasted around four years to mid-2003. With demand growth exceeding the growth in supplies, the production from the following new capacities has been largely absorbed:

In China for example, the growth has been very strong, over 18% for all polymers upto 2000-2001. During the next decade the growth in Polymers forecast for India & China is at 14% and 9% per year respectively. China's growth of 9% must be viewed in relation to their consumption of over 20 million MT versus India's at 4.2 million MT.

Chinese Government's policies, favour the use of plastics over conventional materials on grounds of environmental factors, more specifically "life-cycle analysis"

	plastic pallets in place of wooden pallets.
	pvc window sections in place of wood.
	Plastic piping for floor heating systems

Such policies provide the impetus to wider use and growth.

The global polymer industry is six decades old. Over the last decade - 1992 to 2002 - it grew at a CARG of 5.3%, to 136 million tonnes. LLDPE and PP registered the highest growth rates at CARG of 9.9% and 8.4% respectively.

In comparison the growth in consumption of polymers, last year, in India was 12%, However the overall consumption in India at approximately 4.2 million tonnes, is under 3% of global consumption. India's per capita consumption remains the lowest in the World at around 4 kgs. per year. In comparison the average per capita consumption for ASEAN countries is 17 kgs, with China at 20 kgs against the world average of 25 kgs; the highest being USA at over 100 kgs.

Around 13 million tonnes of additional Polyethylene capacity is expected to be installed and running between 2005 and 2008, of which over 70% will be in the Middle East and Asia-Pacific region.

Additional plant capacities, in China, Saudi and Iran which are expected to be on-stream by 2006-07 are provided in a separate Annexure. This list is by no means complete.

The demand for Polymers is expected to remain ahead of the supply, till atleast 2006 in view of the strong growth potential in the Asia-Pacific Region. Polymer plants will generally operate at or near their peak levels of 90-93% of rated capacity. Estimates of demand-supply indicate that pressures on supply and prices may ease after 2006.

A reliable source predicts however that a "price correction" in October - November 2004, is possible, after the peak Christmas season export orders executed by China get over.

THE CHALLENGE AHEAD:

It is clear from various reports that three factors have contributed to the current price levels of crude, (which are today at twice the levels prevailing in Dec. 2001):

	You can have virtually tailor-made properties to suit a specific application.
	Provide a "high strength to weight ratio" as compared to conventional materials; which is to say, that for comparable performance plastic products will always be lighter than conventional materials.
	"Life cycle analysis" reveals, that plastic products save significant amounts of energy and water resources and emit significantly lower quantum of "green-house" gases to the atmosphere, in comparison with products made from conventional materials.

Plastic products, therefore have a very positive role in "sustainable development".