Reliance Calls for Urgent Scale-Up as China Commands Petrochemical Market

Mumbai, July 11, 2025: Reliance Industries has raised concerns over China’s growing dominance in the global petrochemical sector. Speaking at an industry event, Vikram Sampat, Senior Vice-President of Strategy and Business Development (Polyester Chain), stressed that India risks long-term strategic disadvantage unless it rapidly scales up domestic petrochemical production.

He noted that petrochemicals comprise 40 to 50 percent of the output from Chinese refiners, more than double the typical output allocation in India. India must accelerate its petrochemical production to meet rising demand and push back against China’s growing dominance in the global market.

Growing Demand, Slower Transition

India’s share of global petrochemical consumption remains modest for now. However, with the Indian economy charting the fastest growth among major economies, domestic consumption is poised to rise. Sampat noted that, unlike China, where demand for gasoline and gas oil has peaked, India’s fuel consumption is still on the rise, albeit gradually transitioning toward cleaner energy alternatives.

Strategic Shift Needed to Counter China

Reliance, which currently has a petrochemical intensity of 20 percent, believes this figure could be pushed to 30 to 50 percent if petrol demand peaks. In the event of a diesel peak, this could rise to 50 to 70 percent. Sampat warned that failing to act decisively would allow

“China is taking over the entire petrochemical industry. If we don’t do it, China will continue to grow,” he cautioned.

Chinese Strategy

China’s central planning body directed its refiners to prioritize petrochemicals over traditional fuels. As the world’s leading exporter of polyethylene terephthalate (PET), purified terephthalate acid (PTA), polyvinyl chloride (PVC), and polyester fiber, China’s pivot has significantly impacted global margins and led to oversupply.

Despite these moves, Beijing has mandated a cap on total refining capacity at under one billion tonnes annually by 2025, down from the current 960 million tonnes.

Outlook

Industry analysts suggest Indian refiners will increasingly prioritise petrochemical production as transport fuel demand plateaus. The shift is critical not just for economic competitiveness but also for energy security and long-term industrial strategy.

Disclaimer:  At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations