Page 28 - Plastics News April 2020

Extended lockdown to further hurt Indian Petrochem sector

Mahua Chakravarty India's PE sector and demand from plastic converters are
expected to remain weak. Convertors are still facing
Demand for chemicals such as methanol, styrene significant logistical challenges with trucking product.
monomer (SM) and polyethylene (PE) is expected to
remain weak and hit further lows because of the SM demand from derivatives sectors such as polystyrene
lockdown extension. and acrylonitrile-butadiene-styrene is expected remain
low for some time after the lockdown is lifted next
India's demand for key petrochemical products may take month.
longer to recover as the country's lockdown has been
extended until 3 May to curb the spread of Covid-19 in Manpower shortage is likely to be a major issue for these
the Indian subcontinent. "Producers are holding high sectors, which produce packaging and plastic materials.
polymer inventories, so I do not expect [to see] a restart Most plants in these industries have been shut since 25
[in operations] before a demand pull. Sales can no longer March. Methanol demand in India is expected to remain
be based on a supply push," a key producer said, in a deep slump through the coming month amid storage
referring to an ongoing shutdown at its cracker and and transportation issues as well. "Methanol is facing a
downstream polymer units. lot more problems with storage and transportation from
ports compared with other chemicals, and this will dash
hopes that inventories can be cleared soon," a methanol
importer said.

Middle East-based producers are facing supply pressures
amid the lockdown in India and have had to divert
methanol volumes to China and southeast Asia. "We have
not focused our sales to India this month for obvious
reasons. We will review the Indian situation in May," said
a Saudi Arabia-based producer and exporter of
methanol.
Iran, which is the largest supplier of methanol to India, is
facing considerable challenges in redirecting volumes.
And US-imposed sanctions are leaving Iranian producers
with limited options. "We have not been selling any
The Indian government has announced an extension of cargoes to India. We have lost one of our main export
the country's lockdown until 3 May to contain the markets and now we have to wait longer," said a key
coronavirus outbreak. This comes after states such as Iranian methanol producer.
Maharashtra, Odisha, Telangana, Punjab and Tamil Nadu Petrochemical producers are also expected to maintain
declared on 9-10 April an extension of lockdown reduced operating rates and shutdowns at refineries and
measures until 30 April.
crackers across India. Most of these producers are still
The nationwide lockdown extension will continue to assessing the situation. "We are evaluating [the
keep non-essential services shut. But the government is situation]. It will depend on transport availability for the
looking at making exceptions in some parts of the movement of goods and downstream demand after they
country to minimise economic damage, with no further [downstream plants] reopen," a key producer in eastern
details available yet. India said.

Demand for chemicals such as methanol, styrene Producers like state-owned IOC and private-sector
monomer (SM) and polyethylene (PE) is expected to Haldia Petrochemicals have shut crackers in Panipat,
remain weak and hit further lows because of the Paradip and Haldia since the lockdown from 25 March.
lockdown extension. Concerns are also mounting among Other producers such as state-controlled Bharat
market participants over the impact of the extension on Petroleum have cut production rates at refineries in
the recovery of downstream markets. Mumbai and Kochi.

APRIL 2020 25 Plastics News