The Andhra Pradesh Government is reportedly planning to notify implementation of Energy Conservation Building Code (ECBC) in the state in November 2013. ECBC, which aims at trimming down electricity bills through energy-efficient building designs, has been proposed for large buildings like shopping malls, multiplexes, and sky-scraper commercial and residential buildings having a load of more than 100 KW.
At present, building insulation is relatively new concept in India, with very few green buildings being built in the country. The move such as that of AP Government can be a boon to manufacturers of polyurethane (PU), one of the major materials used in insulation application. “This one application (in building insulation) can have profound effect in generating huge demand for PU material in India,” said an official of a company, which supplies raw material to PU industry.
Low consumption
Though PU finds application in many industries such as furniture & bedding, automotive, construction & building, footwear, appliances, etc, the increasing awareness about energy efficiency is driving the consumption of PU for insulation, especially in buildings. With many industries experiencing slowdown, the PU industry is banking on building insulation application to lift the demand. “At present, most of the PU end-products are more in supply than demand. Application of PU in footwear industry has been growing very fast in last few years since it is replacing other materials such as polyvinyl chloride (PVC) & ethylene vinyl acetate (EVA) because of ease of processing and designing. However, the sluggish growth in auto industry has adversely affected the PU industry. This has resulted in investment delays in new PU project, which may lead to shortage once the economy starts picking up,” said a PU industry expert.
Low per capita consumption of PU in India makes many believe that the demand will only go up in future. “India is a fast growing economy and despite going through a rough time currently, has all the ingredients in place for sustained growth and demand from the polyurethanes market perspective. An expanding middle class with rising incomes, increasing urbanisation and investments in infrastructure growth leads up to many generic and unique India opportunities in PU that the world is waking up to,” said Arun Kumar, Director, Huntsman Polyurethanes Division in India.
He added, “We see an exciting future for the polyurethanes industry in India and polyurethanes based systems are now pivotal to manufacturing across a wide spectrum of applications and industry forecasts do predict this growth to be sustained.”
Energy saved, money gained
Globally, including India, energy efficiency is becoming more and more important in buildings, vehicles, and electric devices, which is leading to a rise in demand of PU as insulating material. India, which is energy deficit country, can save lot of energy with proper insulation. Though PU provides excellent insulation, there are many other insulating materials in the market. Hence, industry is leaving no stone unturned to promote the usage of PU in end-products.
For example, Indian Polyurethane Association (IPUA) through India Insulation Forum (IIF) is promoting the cause of insulation in buildings, which in turn will lead to rise in demand for PU. However, there are many challenges. “Investing in insulation system in a building will pay back in 3-4 years in terms of energy savings. Since the builder will not be in position to benefit from such energy-saving measures after selling the home/building, there is no incentive for the builder to invest in insulation,” said a PU industry expert.
Experts opine that making insulation compulsory in building, by local municipalities and governments, will help the country save energy. For this, ECBC will have to be made mandatory for new buildings. “Since, the country is dependent on imports to meet its fuel needs, India will have to take steps to save power. Savings can happen in transmission and consumption. For example, if there are no proper insulation in a large mall, than lot of energy will be lost due to leakages. PU industry is trying to make India more sustainable and insulation is definitely part of that,” said an expert.
Surging markets
Polyols and isocyanides (methyl di-p-phenylene isocyanate or MDI and toluene di-isocyanate or TDI) are two key raw materials required to manufacture PU. While there are three manufacturers of basic raw materials, there are many system houses, which are blending units that tailor the formulation according to customer’s needs, in India.
PU play critical role in insulation and energy conservation. And increase in demand for building insulation and cold chain network in food industry can significantly raise the consumption of PU in India. “There are established and emerging applications in the Indian polyurethanes market for MDI in innovative footwear technologies, tailor-made solutions for automotive, retail and cold chain solutions for the emerging logistics sector and constructions solutions for infrastructure development. There will be traction in the PU markets development from a 5 years standpoint fuelled by rapid social and economic development in the areas of consumer goods including domestic appliances, automotive, furniture, footwear and insulation for domestic, commercial and industrial building developments. We see a growth in excess of 10% for these sectors,” said Kumar of Huntsman, one of the leading producers of MDI products in the Indian PU market.
As a result, PU players have increased or in process of increasing capacity in India. For example, BASF is investing Rs 1000 crores in a new site, housing an integrated hub for polyurethane manufacturing along with other facilities, which is expected to come on stream in 2014.
Similarly, Huntsman has increased its capacity in 2012. “To meet up with the increasing demand for polyurethanes products, we invested in a new blending house with doubled capacity and technical centre in Pune in 2012 replacing the Mumbai facility,” informed Kumar.
Though automotive application has taken some hit due to slowdown, sectors such as footwear, cold chain, building insulation, etc are likely to catapult PU consumption in India multi-manifolds.