Economy

An Overview of the Chemical Industry in Pakistan

Pakistan is a developing nation with a population of over 200 million people and a GDP of about $278 billion. The chemical industry in Pakistan is one of the key sectors of its economy, contributing around 3 percent of the GDP and about 16% of the manufacturing GDP. 

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The chemical industry is diverse and provides different raw materials to industries like mining, oil and gas, textile, fertiliser, cement, pharmaceuticals, and automotive industries. Graana.com provides a detailed overview of the Pakistan chemical industry and its economic significance below.

 

Overview of the Chemical Industries in Pakistan

The chemical sector of Pakistan has a significant impact on the country’s economy, contributing approximately 4.5% to its total exports and representing around 12% of total imports. Furthermore, the sector plays a pivotal role in the development of forward-linked industries such as the automobile industry in Pakistan, textiles, leather goods, footwear, furniture, and food and beverage production.

Additionally, chemical products are also utilised in backwards-linked industries such as surfactants, which are crucial for oil refineries and oil extraction companies.

The chemical industry in Pakistan has grown significantly over the years due to various factors such as increase in domestic demand, availability of raw materials, favourable government policies, foreign investment, technological advancement, and regional integration. 

 

Uses of Chemical Products in Various Industries

 

 

Pakistan has a diverse and growing chemical industry that produces various products for different sectors. According to the Pakistan Chemical Manufacturers Association (PCMA), consumers buy thousands of chemical products every day.

Some types of chemical products that are used for industrial purposes are as follows.

  • Mining: These include explosives, drilling fluids, flotation reagents, leaching agents etc., which are used for extracting minerals and metals from ores.
  • Oil and gas: These include lubricants, solvents, corrosion inhibitors, biocides etc., used for exploration, production, refining, and transportation of oil and gas.
  • Textile: These include dyes, pigments, bleaches, softeners, finishes etc., used for processing cotton and other fabrics.
  • Fertilisers: These include urea, ammonium nitrate, diammonium phosphate (DAP) etc., which are used for enhancing crop yield and soil fertility.
  • Pesticides: These include insecticides, herbicides, fungicides, rodenticides etc., which are used for protecting crops from pests and diseases.
  • Pharmaceutical: These include active pharmaceutical ingredients (APIs), excipients, intermediates etc., which are used for making medicines and vaccines.
  • Paints and coatings: These include resins, solvents, pigments, additives etc., which are used for decorating and protecting surfaces and objects.
  • Cement: To produce cement, a variety of materials are commonly used, such as limestone, shells, and chalk or marl. These are mixed with other substances such as shale, clay, slate, blast furnace slag, silica sand, and iron ore.

 

Major Players in the Industry

 

 

The chemical industry in Pakistan is a diverse and dynamic sector that produces a wide range of products for various applications. It can be broadly classified into five segments: fertilisers, pesticides, basic chemicals, cement, and pharmaceuticals.

Some of the major players in each segment are:

  • Fertilisers: Engro Fertilisers, Fauji Fertiliser Company, Fatima Fertiliser Company, Dawood Hercules Corporation
  • Pesticides: Syngenta Pakistan, Bayer Crop Science, Four Brothers Group, UPL Limited, FMC Corporation
  • Basic chemicals: Sitara Chemical Industries, Ittehad Chemicals, Descon, Lucky Core Industries
  • Pharmaceuticals: Karachi Chemical Industries (KCI Pharma), GlaxoSmithKline Pakistan (GSK), Abbott Laboratories Pakistan (ABT), Searle Pakistan (SEARL), Getz Pharma
  • Cement: Fauji Cement, Bestway Cement, Lucky Cement, DG Cement

 

Common Raw Materials Used in the Chemical Industry

Some of the key raw materials used in the chemical industry in Pakistan are:

 

Caustic Soda

This is one of the most basic raw materials used in the chemical industry in Pakistan. It is used in 85% of other industries as well, such as textiles, paper, soap, detergents, leather, food processing, and more.

 

Polyvinyl Chloride (PVC)

In Pakistan, PVC is mainly used for manufacturing pipes, fittings, cables, profiles, and footwear. It is also used for medical devices, packaging materials, and consumer goods. The demand for PVC is driven by the construction sector, which accounts for about 70% of the total consumption. 

The sole manufacturer of PVC resin in Pakistan is Engro Polymer & Chemicals Limited (EPCL), a subsidiary of Engro Corporation. EPCL also produces chloralkali products like caustic soda, sodium hypochlorite, and hydrochloric acid, which are used as raw materials for PVC production.

 

Resin

Resin is a synthetic organic polymer that is used for making plastics, adhesives, paints, coatings, and other products. The production in Pakistan is mainly based on petrochemical feedstocks such as naphtha, ethylene, and propylene. Resin manufacturers in Pakistan include Engro Polymer & Chemicals Ltd., Descon Oxychem Ltd., ICI Pakistan Ltd., and others.

 

Soda Ash

Soda ash is a common name for sodium carbonate, which is used for making glass, detergents, paper, textiles, and other products. Its production in Pakistan is mainly based on natural resources such as rock salt and limestone.

The manufacturers in Pakistan include ICI Pakistan Ltd., Olympia Chemicals Ltd., Sitara Chemical Industries Ltd., and others.

 

Hydrogen Peroxide

This chemical compound is used for bleaching, disinfecting, oxidising, and other applications. Hydrogen peroxide production in Pakistan is mainly based on imported raw materials, such as anthraquinone and hydrogen gas.

Hydrogen peroxide manufacturers in Pakistan include Descon Oxychem Ltd., Sitara Peroxide Ltd., Ittehad Chemicals Ltd., and others.

 

Import of Chemicals and Impact on Industry

According to the import data, Pakistan imports $523.4 million in inorganic chemicals and $2.4 billion in organic chemicals, which include chemicals such as Methyl Isobutyl Carbinol (MIBC), Sodium Thioglycolate, Ferric Chloride 96% and Sodium Isobutyl Xanthate (SIBX). 

These chemicals are used for various purposes, such as mining, textile, leather, pharmaceuticals, and agriculture. According to the Eurasia Review, chemical imports constitute about 17% of the total import bill. The impact of these imports on the industry is both positive and negative. 

On one hand, they provide access to quality raw materials that are not available locally or are too expensive to produce domestically. On the other hand, they increase the trade deficit, expose the industry to exchange rate fluctuations, and reduce its competitiveness in the global market.

 

Challenges Faced by the Chemical Industry in Pakistan

 

 

The chemical industry in Pakistan faces many issues that hinder its growth and competitiveness. Some of these are as follows.

 

Lack of Adequate Infrastructure

The chemical industry requires reliable and efficient transportation, communication, energy, water, and waste management systems to operate smoothly. However, Pakistan needs better infrastructure that improves the quality and cost of production as well as distribution of chemicals.

 

High Energy Costs

Pakistan faces frequent power shortages and high electricity tariffs that increase operational costs and reduce the profitability of chemical manufacturers.

 

Regulatory Barriers

The chemical industry has to comply with various environmental, health, and safety regulations that vary across different provinces and regions. However, these regulations are often complex, inconsistent, and outdated.

Moreover, there needs to be more transparency and coordination among different regulatory authorities, which creates confusion and delays for chemical producers.

 

Low Innovation Capacity

The chemical industry requires constant innovation to develop new products, processes, and technologies that meet the changing needs of customers and markets.

However, Pakistan has a low level of research and development (R&D) spending and a weak innovation ecosystem that limits its ability to innovate effectively.

 

Trade Imbalance

The chemical industry in Pakistan faces a trade deficit as it imports more chemicals than it exports. This is due to different factors, such as low domestic demand, high import duties on raw materials, lack of export incentives, and competitiveness issues.

 

Opportunities for the Chemical Industry in Pakistan

 

 

Despite these challenges, the chemical industry in Pakistan also has many opportunities to grow and thrive. Some of these are:

 

Growing Domestic Market

The demand for chemicals in Pakistan is expected to increase as the population grows and urbanises. Moreover, the government’s initiatives to boost economic development, such as China-Pakistan Economic Corridor (CPEC), will create more demand for chemicals in various sectors such as infrastructure, energy, agriculture, and industrialisation.

 

Regional Integration

The chemical industry can benefit from regional integration by accessing new markets and resources in neighbouring countries, such as China, India, Iran, and Afghanistan.

Furthermore, the CPEC project will also enhance regional connectivity and trade facilitation for chemical products.

 

Diversification

The chemical industry can diversify its product portfolio by developing new value-added products that cater to niche segments such as speciality chemicals, bio-based chemicals, green chemicals, and nanomaterials. However, these products have higher margins and lower competition than commodity chemicals.

 

Innovation

The chemical industry can leverage innovation to improve its productivity, quality, efficiency, and sustainability. However, the government needs to support this by providing incentives for R&D spending, building technology parks and incubators, promoting academia-industry collaboration, and facilitating intellectual property rights protection.

 

Conclusion

The chemical industry in Pakistan comes with both challenges and opportunities. The industry requires strategic planning, policy support, and stakeholder engagement to manage.

Moreover, it can play a significant role in enhancing Pakistan’s economic growth, industrialisation, and social welfare if it harnesses its potential effectively.

For more related information, visit Graana.com

FAQs

 

Which is the biggest chemical industry in Pakistan?

The biggest chemical industry in Pakistan is the textile and dyeing industry. It contributes significantly to the country’s economy and employs a large number of people.

What are 5 examples of chemical industries?

Five examples of chemical industries are petrochemical industry, pharmaceutical industry, agrochemical industry, specialty chemical industry, and paint and coatings industry.

What is the largest chemical industry?

The largest chemical industry globally is difficult to determine, as it depends on factors like market capitalization and revenue. However, some of the largest chemical companies in the world include BASF, Dow, ExxonMobil Chemical, SABIC, and LyondellBasell.

What are the 5 most common industrial chemicals?

The five most common industrial chemicals vary depending on the industry. However, some commonly used industrial chemicals include sulfuric acid, sodium hydroxide (caustic soda), ammonia, hydrochloric acid, and ethylene.

Umer Zahid

Umer is a versatile writer at Graana.com with a passion for crafting compelling stories. His expertise lies in crafting clear, engaging content across a range of mediums and formats.

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