India lockdown: Domestic petrochemical markets hit record-lows

Petrotahlil - Petrochemical plants will likely be shut down or lower operations due to a lack of labor and limited logistics, market sources said late Wednesday.

However, some other sources said that certain petrochemical operations would be exempted by the lockdown as the government sets some exceptions for industrial establishments.

According to the government statement, industrial establishments will remain closed with exceptions of manufacturing units of essential commodities, as well as production units, which require uninterrupted operations.

PRICES

**Spot PVC offers for May would likely drop more than $100/mt from April due to the lockdown. CFR India price fell $10/mt week on week to be assessed at $840/mt Wednesday, the lowest level since June 2016.

**PTA CFR India Wednesday fell $25/mt week on week to be assessed at a record-low of $460/mt Wednesday.

**FOB Northeast Asia PET price fell $40/mt week on week to hit a record-low of $700/mt Wednesday, mainly due to bearish upstream markets. Indian buyers continue seeking PET bottle chips for a lower price.

**CFR India methanol price fell $10/mt week on week to be assessed at $172/mt Wednesday, the lowest level since February 13, 2009. Ex-tank prices are expected to remain flat at Rupee 22-23/kg for three weeks.

**CFR South Asia polypropylene marker tumbled $40/mt week on week to hit near four-year low at $870/mt Wednesday for raffia grade. The marker was last lower at $860/mt CFR South Asia on February 10, 2016.

**High density polyethylene prices fell to a 15-year low of $790/mt CFR South Asia Wednesday. The price was down $30/mt on the week, and was last assessed at the same level in January 2004.

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INFRASTRUCTURE

**India's Haldia Petrochemicals will likely shut down its naphtha-fed steam cracker in Haldia after the lockdown. The cracker is able to produce 670,000 mt/year of ethylene, 425,000 mt/year of propylene, and 97,000 mt/year of butadiene.

**India's ONGC Petro additions Ltd, or OPaL, will shut down its steam cracker in Dahej, according to market sources. The steam cracker is able to produce 1.1 million mt/year of ethylene. OPaL will also shut down 115,000 mt/year butadiene unit at Dahej.

**The overall run rate of Indian polyester sector fell to around 10%-20% after the lockdown, from around 70% in early-March and 40% recently, due to weak demand. The operating rate could potentially drop further soon.

**Monoethylene glycol, a key feedstock for polyester, is facing limited storage space, with some Indian producers cutting production rate to 50%, while others trying to explore exports, an Indian MEG producer said.

**Polystyrene producers in India are shutting plants, which has caused difficulties in feedstock styrene procurement, said an Indian PS producer. India, a net importer of styrene, imports almost 60,000 mt styrene during the peak seasons. The closure of ports has forced styrene buyers to cancel order.

**The decline in styrene demand from India further weighed on the bearish styrene market, with the demand in the main Asian outlet turning muted.

**Indian phthalic anhydride producers are permitted to continue to run plants, a production source said Wednesday. However, with the downstream industry shut, the PA could not be moved to customers. Building inventories could eventually force producers to lower operations, the source added.

**India plastic converters were heard to have been shut due to the lack of manpower. Polymer resin hence could not be moved to the end-users, and neither could the finished product be sent out from the factories. This could eventually also force polymer producers to lower operations.

TRADE FLOWS

**India's Haldia said its butadiene exports will be disrupted from the middle of April arrival. The company exports butadiene mainly to South Korea and Southeast Asia. India's butadiene exports will likely be cut by around 6,000 mt.

**Asian producers halted PVC deliveries to India. They are currently looking for alternative markets to sell cargoes. India is a key PVC importer in the region, importing around 2 million mt/year.

**Manufacturing demand is expected to fall and building projects delayed further, which would reduce requirements for solvents, Indian traders said. Indian importers had previously committed a substantial volume of imports at the start 2020 in terms of toluene and solvent-MX.

**India has more than 30 small-based solvent end-users producing coatings, paints and dyes, and similar specialty chemicals, whose monthly consumption for solvents range between 100 mt-400 mt, some traders said, adding that these plants were also involved in the shutdown.

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