Plastic Industry

PLASTIC INDUSTRY Analysis Of Pakistani Industries Presented By: Tabish Jawed Hassan Zaib Khan Waseem Ali Manghi Syed Muhammad Hassan Presented To: Mr. Shahid Hameed

AGENDA          

Introduction History Plastic Industry In Pakistan Structural Composition Sectoral Composition Plastic Processing Demand & Supply Projection Swot Analysis Issues Concerning The Sector Suggestions /Conclusion

PLASTICS

“Any of various complex organic compounds produced by polymerization, capable of being molded, extruded, cast into various shapes and films, or drawn into filaments and then used as textiles fibers”.

Why Plastic is Popular?           

Attractive Hard Soft and Rubbery Easy to clean Flexible Good insulator of heat or electricity Light weight Hygienic Easy to shape and color Economical Non-rusting Material

TYPES OF PLASTICS 

THERMOPLASTICS Plastics, which are capable of being repeatedly softened by heat and hardened by cooling, are called Thermoplastics



THERMOSETTING PLASTICS These are plastics which when cured change into a substantially infusible or insoluble product.

HISTORY    





 

1947: Hand molding machines are reported to be operating 1953: Plastics resin is sold for Rs.3.05 per pound in local markets. 1963: Average prices of plastics resin move up only 90 Paisas in ten years. Exports Promotion Bureau is created. 1973: 120% increase is recorded in the prices of plastics resins in 20 years. Plastics products worth 0.465 million are exported for the first time 1980: Pakistan Plastics Manufacturers Association is formed. The association is registered with the Ministry of Commerce in the month of May. 1988: Plastics Technology Centre (PTC) is established by FCCCL with the assistance of UNIDO at Korangi Industrial Area, Karachi 1999: Engro Asahi Chemical with an investment of US$80 million set-up 100,000 tons PVC plant at Port QasiM 2004: PPMA organizes second (local) exhibition in Lahore. First international plastics exhibition held in Karachi

PLASTIC INDUSTRY IN PAKISTAN 

Plastic industry in pakistan is one of the oldest in the country and its existence can be traced out even in the 1947



Today plastics material constitutes as the fourth largest item of imports.



Global average growth rate of around 7.5 percent but the pakistan industry is growing at an annual average of 15%



The per capita plastic consumption in pakistan has lately risen to 2.7 kilograms



Plastic industry is growing at an annual rate of 2.2%



Factor that hampered the development of local plastic industry was ban on import of brand new plastic machines

PLASTIC INDUSTRY IN PAKISTAN (cont…) 

There are some 6,000 plastic manufacturers in the country



600,000 people are directly and indirectly engaged with this business.



Pakistan imports 70-80 percent raw material for plastic making from different countries

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The prices of raw material of plastic industry depend on international scenario. During iraq war, the prices shot up by 70 percent

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The recent penetration of cheap chinese products into pakistan has made the competitive situation in the local plastic industry very intense

STRUCTURAL COMPOSITION 

RAW MATERIALS



FINISHED GOODS

RAW MATERIALS 

Polyethylene (PE)



Polypropylene (PP)



Polystyrene (PS)



Polyvinyl Chloride (PVC

RAW MATERIALS (cont…) POLYETHYLENE (PE) PE, the leading thermoplastic material, has established its usage in packaging film, household articles, automotive and industrial parts. Now there is no plant producing polyethylene. POLYETHYLENE

QUANTITY

VALUE IN Rs.(000)

1999-00

74486

2548275

2000-01

94300

3089661

2001-02

126459

3665918

2002-03

126674

4490603

2003-04

154877

6234121

2004-05

156419

5545009

RAW MATERIALS (cont…) POLYPROPYLENE (PP) PP is used in the form of woven bags, household articles, furniture and packaging film. There is no plant producing polypropylene at present. POLYPROPYLENE QUANTITY (M. Tons) VALUE IN Rs.(000) 1999-00

65160

2202654

2000-01

85691

2369840

2001-02

33294

2556355

2002-03

102457

3205623

2003-04

109466

3956245

2004-05

144051

4785727

RAW MATERIALS (cont…) POLYSTYRENE (PS) PS is being consumed in electrical and electronic parts, household articles, automotive parts and packing material YEAR

PRODUCTION

IMPORT

CONSUMPTION

1999-00

1,470

11,798

13,268

2000-01

1,302

16,387

17,689

2001-02

1,017

14,452

15,469

2002-03

11,627

18,938

30,524

2003-04

16,394

7,756

23,398

2004-05

36,000

N.A

23,400

RAW MATERIALS (cont…) POLYVINYL CHLORIDE (PVC) PVC is an important material used for wide range of applications. PVC is used for doors, windows, pipes & fittings, profiles, food packaging, furniture, electronic components, foot-wear and cables

POLYVINYL CHLORIDE

QUANTITY

VALUE IN Rs.(000)

1999-00

43848

1338186

2000-01

47861

1521952

2001-02

64103

1779792

2002-03

31604

1120967

2003-04

14884

650554

2004-05

13145

571637

RAW MATERIALS

(cont…)

BREAKDOWN OF PLASTICS MATERIAL WITH GROWTH GROWTH (%) PLASTICS

END USE INDUSTRIES

Poly Vinyl Chloride (PVC)

Pipes, Artificial Leather, Cable Coating, Packaging, Footwear

10

Polyethylene (PE)

Film for Packaging, Bottles and Pipes

27

Polypropylene (PP)

Woven Bags, Auto Parts, Packaging, Pipes House ware & Medical Applications & Pipes

17

Polystyrene (PS)

House & Sanitary Wares, Auto Parts, Electrical Parts

6

FINISH GOODS                  

PET bottles, Jars, Cups Molded Furniture HDPE Sacks & Woven Sacks Commode covers, Flushing mechanisms, Household Kitchenware Water Filter Automotive parts Electronics parts Plastic Sheet Forged, Machined & Heat Treated parts, Crockery items (Forks, Crankshafts) Telecommunication Parts Fan parts Medical Instruments (Syringes. etc.) Resin & Allied Products. Pipes and fittings Plastic Films Waste Processed Products

YEAR

QUANTITY

VALUE

(Million Tons) (Million RS.)

199697

4,873

238

199798

12,325

600

199899

6,780

443

199900

11,035

686

200304

N.A.

33.4

200405

N.A.

111.5

SECTORAL COMPOSITION 

PLASTICS UNITS



LOCAL RAW MATERIAL PRODUCERS

PLASTICS UNITS 

Presently there are 6000 processors in pakistan

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Lahore and karachi are the main centers of plastics processing units

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The organized sector is producing best quality products for domestic, industrial and defense sectors  There are about 600 to 700 medium sized plastics processing units

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The un-organized sector has grown much more rapidly then the organized sector  Besides these units, there are over 5,300 small scale plastics processing units providing employment to about 600,000 people.

CITY WISE PLASTICS UNITS

LOCAL RAW MATERIAL PRODUCERS 

Currently there are four plants in Pakistan producing international quality plastics raw material Gatron Industries  Engro Asahi Polymers  Pak Petro Chemicals  Dyno Pakistan Ltd. 

LOCAL RAW MATERIAL PRODUCERS (cont…) COMPANY

PRODUCT

CAPACITY (M.Tons)

Gatron Industries PET Material

200,000

Engro Asahi Polymers

PVC

100,000

Pak Petro Chemicals

HIPS & PS

Dyno Pakistan Ltd. Methanol Urea Melamine  

Total

36,000 34,000 370,000

PAK PETRO CHEMICALS

OTHER RAW MATERIAL PRODUCERS Name of company

Location

Installed Capacity

Prod. Capacity

Qaiser L. G.

Lahore

30,000

30,000

Shafi Chemical Industry Ltd

Lahore

17,500

17,500

Nimir Chemicals Pakistan Ltd.

Lahore

15,000

15,000

A.T.S. Synthetic (Pvt.) Ltd.

Lahore

14,040

14,040

Ravi Chemicals

Lahore

5,000

5,000

Delta Industries (Pvt.)Ltd.

Lahore

2,400

1,100

BASF Pakistan Limited

Karachi

3,600

1,500

BASFA

Lahore

2,400

500

Al-Khair

Karachi

2,400

500

Gujranwala

1,200

380

Indus Resin Ltd.

Karachi

1,200

120

Mirza Jee

Multan

480

40

Sheikhupura

551

228

Berger Paints Pakistan Ltd.

Karachi

266

171

Royal Resin

Lahore

266

171

Complex Chemical

Hattar

181

76

Premier Resin

Lahore

85

38

Shalimar Polymer Ind.

Lahore

266

133

Polymer Industries

Nimir Resins Ltd.

PLASTIC PROCESSING NO. MOLDING PROCESS

PRODUCT

1

Extrusion Molding Pipe, Fiber, Film, Sheet & Thermoforming, Profile, Pipe, Wire & Cable Etc.

2

Injection Molding

Bucket, Housing Automation

3

Blow Molding

Container, Bottle

4

Vacuum Forming

Pack case For Product)

5

Pressure Forming

Suitcase (Thick Sheet Product)

6

Rotation Molding

Bottle, Doll

Egg

Of

(Thin

Office

Film

DEMAND & SUPPLY PROJECTION 

DEMAND & SUPPLY RAW MATERIAL



DEMAND ESTIMATES FOR MACHINERY



DEMAND ESTIMATES FOR ENGINEERING THERMOPLASTICS

DEMAND & SUPPLY RAW MATERIAL (Metric Tons) PRODUCTS

CONSUMPTION ESTIMATED DEMAND 2001 – 2002

2004 2005

2009 - 2010

Polyethylene (PE)

157500

235000

340000

Poly Propylene (PP)

144000

150000

205000

Polyvinyl Chloride (PVC)

78000

95000

120000

Polystyrene (PS)

23400

35000

45000

402900

515000

710000

 

Total

DEMAND ESTIMATES FOR MACHINERY Injection Molding

250-500

Blow Molding

350-500

Extrusion

1000

DEMAND ESTIMATES FOR ENGINEERING THERMOPLASTICS YEAR ABS

2004 11000

Polyamide

700

PBT Molding Material

200

Polycarbonate

6000

Polydactyl

1000

SWOT ANALYSIS STRENGTHS 

Easy availability of cheap labor



Increasing domestic market having demands from both low-end and high-end segments.

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Several Large Units are also present.

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Industrial Zones facilities are available.

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Location is a competitive strength.

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Acceptable as international Avenue for Exhibitions / Seminar / Foreign Buyers visit.

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Sound Cash flows

SWOT ANALYSIS (cont…) WEAKNESSES 

The industry is largely unorganized and scattered.

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Professional management is not perceptible in the cluster.

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The manufacturers are material from outside.

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Lack of Research & Development efforts.

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Lack of vision / Planning.

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Traditional designs and no innovations.

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Not getting benefits from support institutions.



Nominal Export.



Weak Association.

dependent

on

imported

raw

SWOT ANALYSIS (cont…) OPPORTUNITIES 

Pakistan is emerging as a major consumer market and international demand is also on the rise for plastics.



Globalization and free trade.

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Strong National Economic indicators working for benefit of Industry.

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Linkages with BDS & Support service providers.

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Product Marketing

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New and innovative products

SWOT ANALYSIS (cont…) THREATS 

Globalization and free trade.

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High custom duties on Raw Material

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Local Market Penetration by regional competitors.

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High Quality Standards.

ISSUES CONCERNING THE SECTOR 

DUTIES & TAXES



ENVIRONMENTAL HAZARDS



PROBLEMS

DUTIES & TAXES 

Plastics sector remains one of the major contributors

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Import duties have been gradually reduced from 110 percent to 10 percent on major plastics materials

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Adjustable sales tax on manufactured plastics goods is 15 percent



To calculate total duty

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A factor of 64 percent is used for PP/PVC and 50 percent for PE

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Six percent income tax is not refundable to traders

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Sales tax on manufactured plastics goods is 15 percent

DUTIES & TAXES (cont…) DUTIES & TAXES

%

Custom Duty (All Plastics)

5%

Polyethylene

5%

High Impact Polystyrene

5%

Pet Material

10%

Sales Tax

15%

Income Tax on Imports

1%

ENVIRONMENTAL HAZARDS 

Plastic bags are an environmental hazard and their production and use need to be disallowed in the country.



Used plastic bags are found in abundance in the streets and are responsible for clogging drains and sewerage lines.

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In the rural areas, these bags decrease the productivity of the arable land because they do not rot or turn into compost. The most dangerous are the black bags, made of recycled plastic which increases their toxic content.

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Plastic's non-biodegradability poses serious environmental and health problems. In addition, the additives used in processing plastics results in the presence of substances that are a serious health hazard.

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Burning the waste releases dioxin - a class of 75 chemicals which is carcinogenic and causes birth defects and other serious ailments like cancer.

PROBLEMS 

Sales Tax for the organized sector is 15 percent, whereas the unregistered buyers can get any amount of the Plastics materials by paying 16.5 percent sales tax.

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Export Promotion Bureau needs to enhance its cooperation with the manufacturers in international exhibitions.

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Lack of information on potential export markets is an impediment to export growth.

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Interrupted power supply is not only affecting production but also damaging the expensive machines.

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Incentive for deletion is limited to a few components.

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Lack of adequate training institutes.

PROBLEMS (cont…) 

PSI is not playing its due role for better quality control.



There are no export ware houses particularly for capturing South African market.

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Lack of financial assistance.

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Sales tax on import of moulds is not adjustable against output tax.

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Tariff on High Impact Polystyrene (HIPS) has been reduced to 10 percent from 25 percent that is hurting the local industry.

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Intellectual property and copyright laws are not strictly enforced

SUGGESTIONS 

Creation of a plastics desk in the Export Promotion Bureau (EPB).

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Establishment of plastics website providing information on imports, exports, international associations, plastics processors in Pakistan.

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Export ware-houses in target markets.

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Holding national and international exhibitions.

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EPB should ensure participation of genuine exporters.

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Providing more realistic export rebate for PP woven sacks and other items.

Any question…???