New Delhi, Aug 4 (NationPress) India is strategically poised to become a regional consolidator in the petrochemicals industry, thanks to its strong domestic demand and growing manufacturing capacity, as highlighted in a report published on Monday.

The report from the Boston Consulting Group (BCG), named 'Preparing for the Next Wave of Petrochemical Consolidation,' indicates that the global petrochemical landscape is about to experience considerable consolidation. This shift is being driven by extended low margins, overcapacity, and changes in regional growth trends.

It urges Indian petrochemical firms to reevaluate their portfolios, anticipate various market scenarios, and take proactive steps to seize the upcoming wave of opportunities.

The document underscores the significant drop in sector profitability, noting that average Return on Capital Employed (ROCE) has decreased from 8 percent in 2019 to around 4 percent in 2024. It also points out that capacity expansions in several areas are outpacing demand growth, leading to increased rationalization and consolidation as companies strive to maintain competitiveness in a challenging environment.

“Recognizing this strategic opportunity, Indian petrochemical companies should look beyond organic growth and focus on targeted M&A, vertical integration, and enhancing technological and sustainability capabilities,” the report emphasizes, showcasing the strength of India's industry built on solid domestic demand.

Kaustubh Verma, managing director at BCG, commented, “As the global petrochemical industry transitions into a new stage of consolidation, India finds itself at a strategic inflection point. With robust domestic demand and an expanding manufacturing base, Indian players can establish regional leadership by leveraging targeted M&A, securing essential feedstock access, and enhancing their technological and sustainability advantages.”

“To maintain competitiveness, companies need to proactively evaluate their portfolios and prepare for various market scenarios. Those who take decisive action now will be better positioned for long-term success,” he added.

The report notes that margin pressures are likely to persist due to slow demand growth and rising production capacities, which compel global petrochemical companies to enhance operational efficiency.

In the coming years, capacity rationalization and strategic M&A will likely dominate boardroom discussions, as per the report.