Corrected: India’s HOCL may stop phenol, acetone production indefinitely

25 February 2013 10:35  [Source: ICIS news]

Correction: In the ICIS news story headlined "India’s HOCL may stop phenol, acetone production indefinitely" dated 25 February 2013, paragraphs were changed to remove reference to phenol and acetone as two separate plants, and to indicate that HOCL stopped production at the plant three months ago, instead of just shutting down phenol production. A corrected story follows, with recasts throughout.

KOLKATA (ICIS)--Indian government-owned Hindustan Organic Chemicals Ltd (HOCL) may be forced to keep its phenol/acetone production shut, citing strong competition posed by lower-priced imports in the domestic market, a company official said on Monday.

Production at the plant, which can produce 40,000 tonnes/year of phenol and 25,000 tonnes/year of acetone, in Kerala province in southern India was suspended in the last three months, the official said.

Imported phenol is currently being sold at a discount ranging between $148/tonne (€112/tonne) and $180/tonne over HOCL’s domestic selling price of $1,850/tonne.

For acetone, HOCL’s domestic selling price is $1,609/tonne. Despite the shut production, the company is still selling acetone from its inventory, the official said.

Imported acetone, on the other hand, is available at a cheaper price of around $1,140/tonne on a cost-and-freight (CFR) basis.

HOCL had been running its plant at 50% of its capacity since March 2012, when huge volumes of phenol/acetone flowed into India upon the lifting of the country’s antidumping duties (ADD) on imports from South Korea, Taiwan and the US, the company official said.

The ADDs on phenol/acetone imports from these countries, along with those from three others, were in effect from 2008.

ADDs on acetone and phenol imports from South Africa, Singapore and EU, were extended and will remain in effect up to end-June 2013.

“The [market] situation is expected to worsen since antidumping levies on phenol and acetone imports from South Africa, Singapore and EU is scheduled to be lifted from July 2013 following a mid-term review and as recommended by [the] DGAD [Directorate General of Anti-dumping and Allied Duties],” the HOCL official said.

Even with the current ADD on acetone, the landed price of imported material is $200-300/tonne cheaper than HOCL’s domestic selling price, the HOCL official said.

HOCL, set up by the Indian government in the early 1960s with the objective of achieving self-reliance in production of organic chemicals with a product portfolio of phenol, acetone, nitrobenzene, aniline, nitrotouluenes, chlorobenzenes and nitrochloronenzes.

Apart from the Kerala complex, the company also operates an organic chemical complex at Maharashtra province in western India.

($1 = €0.76)

By: Ajoy K Das
+65 6780 4359

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