India Petrochemicals Demand Face Downturn with Extension of Lockdown till May 3rd
by Chem Analyst Chemical Database PriceAlthough Indian players have turned optimistic as the
country’s efforts in containing the contagious spread of the coronavirus are
being widely appreciated, the battle is yet to be won! The uncertainty is still
lingering the country’s petrochemicals market, where demand outlook seems
bearish as the lockdown extends till May. Despite relaxed restrictions on
certain businesses after 20th of this month, several downstream
industries are likely to remain shut or work with less labor at reduced rates.
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Players Declare Production Halts as Demand Depresses
Waning demand since the PM announced 21-day lockdown
starting 25th March 2020 led major refiners, both state-run and
private including Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL), and
Haldia Petrochemical Ltd (HPL) to induce production cuts or shut units so as to
balance inventory against the drop in domestic demand. As per the sources,
sensing the demand slowdown, IOC is planning to shut down its 800 KTPA cracker
located at Panipat, Haryana. HPL has also closed its steam cracker and polymer
units fearing rise in inventory levels. BPCL has also reported that the company
has reduced the run rates of the refinery-linked petrochemical units in Kochi
and Mumbai to less than a third. On 15 April, Gas Authority of India Ltd (GAIL)
confirmed the shutdown of its 400,000 KTPA polyethylene (PE) plant at Pata in
Uttar Pradesh state due to overflowing inventories and logistical constraints.
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Downstream Players Await Relaxation
Downstream industries such as packaging and plastics
industry, auto components manufacturers and paints and dyes industries are
eyeing on instructions from concerned authorities as the Indian government
declared partial relaxation on certain sectors after 20th April.
Several packaging companies like UFlex and Ecoplast have restarted partial
operations at their factories after packaging materials were declared as
essential goods in early April.
Petrochemical Price Crash
Petrochemical prices plunged to several years low after the
onset of coronavirus in India. Subdued demand due to lack of buying orders and
plummeting crude have put a huge dent to the Asia’s petrochemical industry.
Players are anxious whether the lockdown will end by the stipulated time, and
how fast the operations will get back to normal considering supply chain
restrictions and expected labor migration may be other impediments for the
recovery of the petrochemical sector.
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Created on Apr 20th 2020 10:52. Viewed 276 times.