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Chemical industry in Pakistan.

Chemical Industry in Pakistan

Every single object or product uses chemicals in one or the other form. The food we eat is nothing but Chemical, the plants use chemicals as food too, in the shape of chemicals fertilizers. Human lives are saved from pest and diseases by means of pharmaceutical chemicals and insecticides and pesticides, which also save the plant life from the onslaught of pests, insects and other parasites. In industry, chemicals are used in almost all industries, some using more white the other in lesser quantities. Some of the manufacturing industries which heavily depend on chemicals include, the iron and steel industry, the textile, paints, leather, ceramis, glass, explosives, paper, pharmaceutical, rubber, perfumery, cosmetics, sugar, printing, photographic, matches, plastic, petroleum and petro-chemical industries, which include the synthetic resin and synthetic fibre manufacturing industries.

Chemical industry of a country is indicative of the country's over-all economic development and potential. The recent advancement in technology has made chemical industry a basic industry of primary importance. The steel industry which has hitherto been regarded as a key industry is losing ground in the face of the growing chemicals such as hard plastics which are replacing steel from the places where it enjoyed a monopoly.

At the time of independence in 1947, Pakistan had no industrial base. It heavily depended on imports of items such as textiles, matches, paper, glass, glassware, ceramics, cement, paints, pharmaceuticals, and in fact, every conceivable item of consumption. Consequently, the production and imports of chemicals was negligible. There were no fertilizer plants and the only chemical produced within the country, and that too is small qunatities, was soda ash. The rapid industrialization resulting in the large increase in products such as textiles, glass, paper, ceramics, paper board, pharmaceuticals, paints and a number of other chemical consuming products, has enlarged the demand for all types of chemicals.

The distinction between the processing group which uses chemicals as a means of producing a final consumer product and the chemical industry which produces basic chemical industry which produces appears to be disappearing as the chemical industry has extended its branches in almost all directions. This change became more pronounced after the World War-II when a large number of manufacturers became manufacturers of semi-finished or consumer products such as man-made fibres, fabrics coating,, plastics and detergents etc.

There is no known-common classification of chemical industry. However, for the purpose of convenience a category known as `Chemical and Allied Products' has become common in United States of America, which can further be sub-divided into three general classes of products:

a) Basic chemicals also known

as Heavy chemials such as

acids, alkalis, salts and organic

chemicals.

b) Chemical products to be used in

further manufacture such as

man-made fibres, plastic materials,

crude animal and vegetable

oils, dry colours and pigments.

c) Finished chemical products to

be used for ultimate consumption

such as drugs, cosmetics and

soaps or to be used as materials or

supplies for other industries such

as paints, fertilizers and explosives

etc.

Growth

Pakistan had a small basic chemical industry in 1947. By the middle of 1955, there were 4 units for the production of sulphuric acid considered to be an index of industrial activity. One unit at Lyallpur used its output within its plant for further processing. About 3300 tons were available to the market from three plants at Karachi, Sukkur and Rawalpindi. In the First Five Year Plan, a sum of Rs. 2.5 million was provided for the establishment of one plant with annual production capacity of 3,000 tons. Additional Rs. 200,00 were provided for the modernisation of existing plants.

The production capacity for soda ash was 20,000 tons a year at Khewra in the Punjab. Actual annual output was about 24,000 tons. There was one plant for the production of 3,000 tons of caustic soda at Nowshera in NWFP. Production of this unit was used within the plant for the production of card-board. Annual imports were 8 to 9,000 tons for soap and other industries. Since then there has been sizeable investment in the chemical industry and annual production has been increasing fast as given in Table-1:
 Table : TABLE - I
 Production of Basic Chemicals
 (Tonnes)
 No. of
 Reporting Soda Caustic Sulphuric Choride
Year Factories Ash Soda Acid Gas
1979-80 11 79,417 39,893 57,367 8,646
1980-81 13 96,404 38,469 71,247 8,329
1981-82 13 107,190 40,548 71,826 7,904
1982-83 13 94,352 41,065 71,059 8,051
1983-84 13 106,555 39,740 80,748 8,454
1984-85 13 122,071 40,281 77,906 8,399
1985-86 13 128,417 54,819 80,444 7,918
1986-87 12 130,274 54,889 77,610 6,968
1987-88 12 134,106 61,344 78,723 8,009
1988-89 14 144,301 66,452 78,755 8,923


Source: Monthly Statistical bulletin, Federal Bureau of Statistics, Vol. 37 No. 8

Heavy Chemicals

Heavy chemicals that sell at low prices, relative to their weight and bulk, constitute the major portion of chemical products. Although these are quite diverse yet these have some common characteristics, in addition to those given above. They turn out their products in thousands of tons instead of pounds. The raw materials, salt, air, sulphur, lime etc., are plentiful and easily available and value added by manufacture is not high. Production of heavy alkali industries like soda ash and caustic soda, for instance showed phenomenal growth since the early 1960's yet these products were produced in insufficient quantities and were barely adequate to satisfy the burgeoning demand of these products. During the Second Five Year Plant 1960-65, a Soda Ash plant was set up near Karachi and a Caustic Soda plant, using the electrolytic process was established near Lahore, with a capacity of about 20,000 tons per annum. Chlorine available as a by-product from electrolytic caustic soda plant, was to be used to make hydrochloric acid, liquid chlorine, bleaching powder, polyvinyl-chloride, DDT and similar other products.

The basic chemical industry was taken over by the Government in January 1972 under Economic Reform Order 1972. The Government established Federal Chemical and Ceramics Corporation Ltd. FC&CCL) on August 13, 1973 to develop the chemical industry on national basis and to set up new projects for making the country self-sufficient in as many basic chemicals as practicable.

Caustic Soda

It is an important chemical used by a large number of industries such as detergents, paper, textile and oil refining. The main raw-material required for manufacturing caustic soda is salt and electric power. Salt is abundantly available in Jhelum District of Punjab. Besides, sufficient quantity of salt can also be manufactured from sea water. The supply position of other raw materials needed by the industry is also satisfactory and the imported raw materials constitute only about 13 per cent of the total cost of production.

Caustic Soda in liquid and solid form is one of the most important raw material used by the soap industry. It is soluble in water and acts as a strong detergent. According to the Industrial Investment Schedule of the Sixth Five Year Plan capacity for caustic soda has been targeted to increase from 51,000 to 136,000 tonnes, by the end of the Sixth Five Year Plan envisaging an investment of Rs. 600 million. The capacity has increased to about 149,000 tonnes in 1989 with actual production at 66,452 tonnes. The actual production of caustic soda during the last eight years is as follows:

Table : TABLE-II

Local Production of Caustic Soda
 Production % In-
Year (tonnes) crease
1981-82 40,548 -
982-83 41,065 +1.27
1983-84 39,740 -3.22
1984-85 46,020 +15.80
1985-86 54,819 +19.11
1986-87 54,889 -0.12
1987-88 61,344 +11.76
1988-89 66,452 +8.32


Source: Federal Bureau of Statistics

Local production of caustic soda has increased from 40,548 tonnes in 1981-82 to 66,452 tonnes in 1988-89 showing a growth rate of 7.27% which is very encouraging.
 Table : TABLE - III
 Import of Caustic Soda
 Quantity Value
Year (tonnes) (000 Rs.)
1981-82 28,991 82,000
1982-83 31,684 37,268
1983-84 5,240 18,197
1984-85 4,731 29,642
1985-86 7,758 22,336
1986-87 32,932 78,960
1987-88 8,245 26,947
1988-89 7,822 73.028


Source: Foreign Trade Statistics

The import figures include caustic soda both in solide and liquid. Imports in terms of volume have declined by almost 81 per cent and in terms of value by 69 per cent during the span of last seven years.
 Table : TABLE - IV
 Domestic Availability
 of Caustic Soda
 (Tonnes)
Year Production Imports Total
1981-82 40,548 28,991 69,539
1982-83 41,065 31,684 72,749
1983-84 39,740 5,240 44,980
1984-85 46.020 4,731 50,751
1985-86 54,819 7,758 62,577
1986-87 54,889 32,932 87,821
1987-88 61,344 8,245 69,589
1988-89 66,452 7,822 74,274


Source: Federal Bureau of Statistics

Domestic availability (Domestic demand) is around 74,274 tonnes during 1988-89 as against 69,539 tonnes during 1981-82. This means that on an average domestic demand has shown an upward trend.

The existing sanctioned/installed capacity for caustic soda in the country is 85,365 tonnes as shown in Table-V.
 Table : TABLE - V
 Production Capacity
 of Caustic Soda
 Annual
Name of Plant Capacity


Ittehad Chemicals
Kala Shah Kaku 49,500
Pakistan PVC Ltd., Gharu 7,200
Sind Alkalis Ltd. Landhi 3,000
Chemicals Ltd., Charsadda 3,300


Adamjee Paper &
Board Mills, Nowshera 3,000
Sitara Chemicals 12,000
Other Small Units 5,000
 TOTAL: 83,000


Source: Annual Reports of Companies.

Out of the above listed units, two units are attached with paper manufacturing units and meet exclusively their own requirements with no surplus for open market. In addition there are small causticising units with a captive capacity of about 4,000 tonnes per annum of caustic soda from soda ash for their own soap manufacturing requirements. That means, there are only four units for the production of Caustic Soda, with a total installed capacity of 83,000 tonnes per annum, to meet the entire open market requirements. Out of these four units, two units namely Ittehad Chemicals and Pakistan PVC based on electrolytic process, while Sindh Alkalis Limited has a Cauticising plant attached with the Soda Ash unit which converts the surplus Soda Ash into Caustic Soda with limited production.

Capacity Utilization

In the past the electrolytic units had to reduce their production because of limited use of chlorine and inadequate outlets of chlorine disposal. Later better utilization of chlorine in the form of hydrochloric acid and Bleaching powder etc., gave an optimistic future. At present the capacity utilization has improved considerably. The production of caustic soda has registered a growth rate of 6.39 per cent per annum over the past nine years and capacity utilization during 1988-89 works out to 77.84 per cent. Two new units are expected to come and supply from Bela Chemicals Ltd. are expected to be at 60 per cent, 70 per cent and 80 per cent in 1988-89, 1990-91 and following that 9000, 10,500, 12,000 tonnes respectively.

New Sanctions

There exists a wide demand supply gap in the production of caustic soda. To remove the current gap in availability and demand, five new units (2 in Punjab, 2 in Balochistan and one in Sindh) have been sanctioned by the Government in Private Sector, the total capacity of these sanctions will be 79,000 tonnes per annum. In addition three more units have been approved by IPB in the recommendations of the Provincial Government of Punjab with a total capacity of 23,000 tonnes of Caustic Soda per annum. The aggregate capacity of new sanctioned units works out to be about 71,000 tonnes per annum. The total capacity in production and sanctioned worked out to be 180,465 tonnes per annum. The break-up of this is as follows:
 Table : TABLE - VI
 Sanctioned & Installed
 Capacity of Caustic Soda
Capacity Tonnes
Existing Capacity 85,365
Bela Chemicals Lasbela 15,000*
Zahid Chemicals 30,600
Basic Chemicals Dhabeji 12,400
Al-Hamd Chemicals 6,000
G.M. Chemicals 8,100
Chaudry Chemicals 9,000
 TOTAL: 166,465


* Under trial production

Soda Ash

Sodium carbonate is a white crystalline powder. In Chemical Industry the term "Soda Ash" is used for the anhydrous salt of sodium carbonate. It has a melting point of 851oC, density at 20oC, 2.53 gm/ cm3. Soda Ash production is basic to the chemical production and is taken as a good indicator of general industrial status. Consumer Industries of Soda Ash are glass, soaps/detergents and sodium silicate. The amount of sosa ash used in the chemical industry is next to that of sulphuric acid. The by-product of soda ash is sodium bicarbonate mostly used as baking powder, in fire-existiguishers and in carbonated beverages.

The basic raw materials used in the manufacture of soda ash are common salt and Lime Stone. Both these materials are available in abundance in the country. In addition to these materials natural gas and ammonia are also used in soda ash manufacture, these are also available locally. Soda Ash is produced industrially by either of the two following processes:

a) Solvay Process (Ammonia Soda) b) Electrolytic Process.

Solvay process is current in Pakistan

Production Capacity

The present installed capacity for the production of soda ash in Table-VII.

Table : TABLE - VII
 Soda Ash Production
 Capacity (1987-88)
 (Tonnes)
Name and Annual
Location Production
of the Capacity
Unit (1988)
ICI Khewra 89,000
Sindh Alkalis Ltd. Karachi 51,000
 TOTAL: 140,000
 Table : TABLE - IX
 Local Production of Soda Ash
 Production %
Year (Tonnes) Increase
1983-84 106,555 +12.93
1984-85 122,071 +14.56
1985-86 128,417 + 5.19
1986-87 130,274 + 1.44
1987-88 134,106 + 2.94
1988-89 144,301 + 7.60


Average growth rate per annum 7.44%.

Source: Federal Bureau of Statistics

Consumption of Soda Ash

Soda Ash in an important chemical of commerce and is consumed by many industries. The consumptions of this chemical by various industries is given in the table No. X.
 Table : TABLE - X
 Estimated Consumption of Soda Ash
 Soda Ash Capacity of 1987-88* Soda Ash
 used per Industry Production Used
Industries (Tonne) (Tonnes) (Tonnes) (Tonnes)
Glass 0.200 356,000 331,000 66,200
Soap 0.025 380,000 299,000 7,475
Detergents 0.250 27,000 21,000 5,250
Paper 0.100 170,000 150,000 45,500
Silicate 0.250 90,000 60,000 15,000
Edible Oil 0.020 570,000 456,000 9,120
Others - - - 5,000
 TOTAL: 153,545


Estimates based on different feasibilities * Estimates based on previous performance.

In addition about 10,000 tonnes of soda ash is used by Sindh Alkalis for the production of Sodium Bicarbonate and Brine purification.

Demand Projection

There is no import of Soda Ash and the country's demand is met by the local production. Considering the latest growth rate it is assessed that annual demand of this chemical would rise at the rate of 6 per cent per annum. Thus the demand by the end of 7th Five Year Plan would be 170,000 tonnes and by the end of 8th Five Year Plan it would increase to about 230,000 tonnes. The present installed capacity is 140,000 tonnes. This will leave a shortage of 30,000 tonnes by the end of 7th Five Year Plan and about 90,000 tonnes by the end of 8th Five Year Plan 1997-98. A plant of capacity of 1,00,000 tonnes is quite viable. Initially, a unit of 50,000 capacity may be established with planned expansion thereof upto 1,00,000 tonnes by 1995 or thereabout. ICI has plans to increase its plant capacity from 89,00 tonnes to 135,000 tonnes.

On basis of new base of 144,000 tonnes of Soda Ash and the annual growth rate of 7.44 per cent the new demand has been projected. According to this estimate the demand worked out to 184,951 tonnes to be attained in 1994.

Table : TABLE - XI
 Annual Compound Growth Rate
 (Base 1988-89 131,833 tonnes)*
Projection 7%
Year Growth
1989-90 141,061
1990-91 150,935
1991-92 161,500
1992- 93 172,805
1993-94 184,901


* Average production of last 5 years with growth of 7.44% per annum.

Source: IR - Estimates

The local demand of soda ash would outstrip the local production of two existing units. A new unit for production of soda ash was suggested in the 6th Five Year Plan. However, no unit was set up so far.

Pricing of Soda Ash

The following table illustrates the wholesale prices trend of Soda Ash.
 Table : TABLE - XII
 Average Wholesale Prices
 of Soda Ash per Bag of 80 KG.
 (Rs. per bag)
Year Price
1980-81 209.87
1981-82 223.64
1982-83 236.65
1983-84 246.67
1984-85 260.00
1985-86 278.00
1986-87 340.00
1987-88 395.00
1988-89 400.00


Source: Federal Bureau of Statistics,

Table : TABLE - VIII
 Capacity Utilization of Soda Ash Industry
 a/Sindh Alkalis Ltd. ICI TOTAL
Year Tonnes (%) Tonnes (%) Tonnes (%)
1983-84 30,216 59 76,339 86 106,555 76
1984-85 41,346 81 80,725 90 122,071 87
1985-86 46,300 91 82,117 92 128,417 92
1986-87 46,920 92 83,354 93 130,274 93
1987-88 48,345 95 85,761 96 134,106 96
1988-89 49,162 96 95,139 106 144,301 102


a/ The internally consumed soda ash fo Bicarbonate production and Brine

Purification has not been deducted from the gross production. Source: 1. Annual Reports of Government sponsored Organisation
 2. Local Enquires (NDFC & ICI)
 3. Federal Bureau of Statistics, Government of Pakistan.
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Title Annotation:Pakistan's chemical industry
Author:Haidari, Iqbal
Publication:Economic Review
Date:Nov 1, 1990
Words:2981
Previous Article:Sugarcane and sugar industry: problems and issues.
Next Article:Sulphuric acid.
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