New Delhi, Aug 4 India is uniquely positioned to emerge as a regional consolidator in the petrochemicals sector given its robust domestic demand and expanding manufacturing capacity, according to a report released on Monday.
The report by the Boston Consulting Group (BCG), titled 'Preparing for the Next Wave of Petrochemical Consolidation,' stated that the global petrochemical sector is set to undergo significant consolidation, driven by prolonged low margins, overcapacity, and shifts in regional growth patterns.
It urges Indian petrochemical companies to reassess their portfolios, anticipate multiple market scenarios, and move early to capture the next wave of advantage.
The highlights the steep drop in sector profitability at present, with average ROCE falling from 8 per cent in 2019 to around 4 per cent in 2024, and highlights that capacity additions in several regions are outpacing demand growth. These conditions are accelerating rationalisation and consolidation efforts, as companies seek to remain competitive in an increasingly challenging environment.
“With an eye on this strategic opportunity, Indian petrochemical players must now look beyond organic growth to targeted M&A, vertical integration, and investment in technological and sustainability capabilities,” the report stated, highlighting the strength of India’s industry based on strong domestic demand.
Commenting on the opportunity ahead, Kaustubh Verma, managing director at BCG, said, “As the global petrochemical landscape moves toward a new phase of consolidation, India stands at a strategic inflection point. With strong domestic demand and a growing manufacturing base, Indian players have the opportunity to carve out regional leadership by leveraging targeted M&A, securing critical feedstock access, and strengthening their technology and sustainability edge.”
“To stay competitive, companies must proactively assess their portfolios and prepare for multiple market scenarios, those who act decisively now will be better positioned to capture long-term advantage,” he added.
The report observes that the margin pressure is here to stay as due to the slow demand growth and increasing production capacity, global petrochemical players face tighter margins and the need for operational efficiency.
Capacity rationalisation and strategic M&A will likely dominate boardroom discussions over the next few years, according to the report.
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