Reliance to achieve full output at new PP line by mid-June

04 June 2009 11:01  [Source: ICIS news]

SINGAPORE (ICIS news)--India’s Reliance Industries (RIL) expects to achieve full production at its newly started polypropylene (PP) line at Jamnagar, in Gujarat state, by mid-June, a source close to the project said on Thursday.

“The newly started PP line is operating at 80% capacity currently, and securing propylene feedstock from Reliance’s new fluid catalytic cracker (FCC) at Jamnagar,” the source said. The new PP line achieved commercial production in early May.

The company plans to start up its second new PP line at the same site by early July, the source added. Both PP lines have a capacity of 450,000 tonnes/year each.

The new FCC unit was running at reduced operating rates and was expected to stabilise in the next two weeks, he added.

The source could not give details on the present operating rate of the unit or the amount of propylene being produced.

Reliance also operates an older 1m tonne/year PP plant and FCC unit at Jamnagar, which recently relinquished their export oriented unit (EOU) status, in order to cater to domestic demand.

Under the EOU label, the company was required to export 50% of the output from the complex. The new PP lines at Jamnagar, which are located in a special economic zone (SEZ), would be treated like overseas units, and have to pay import duty if they sell into India.

“Therefore the company would prefer to use the output from the older plant for domestic sales and direct product from the new lines into export markets,” the source said.

Domestic demand for PP was currently quite strong, the source added. However, Indian producers reduced PP prices by Indian rupees (Rs) 9,000/tonne ($190.84/tonne) last week to Rs57,000-58,000/tonne in a bid to compete better against lower priced imports.

The rupee has strengthened by more than 5% in the past two weeks on the back of improving sentiments in the wake of a decisive mandate following the recent Indian federal elections.

The only other Indian PP producer besides Reliance is Haldia Petrochemicals.

($1 = Rs47.16)

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By: Prema Viswanathan
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