India’s Reliance to restart Vadodara LAB unit if economics improve

12 June 2013 10:12  [Source: ICIS news]

SINGAPORE (ICIS)--India’s Reliance Industries plans to restart its linear alkyl benzene (LAB) plant at Vadodara in Gujarat state only when market economics improve, a source close to the company said on Wednesday.

“The current spread between prices of LAB prices and its feedstocks is too narrow to allow the plant to operate in a viable manner,” the source said. Company sources were not available for comment.

According to industry sources, at the current feedstock cost level, LAB prices need to be above $1,900/tonne (€1,425/tonne) FOB (free on board) India for the plant’s operations to be viable.

In addition, the Vadodara plant is 33 years old and not very energy-efficient, the sources said.

The 60,000 tonne/year plant was shut for maintenance in the third week of February and was expected to be restarted by the end of March. However, the turnaround was extended, first because of technical issues and then because of high feedstock benzene and jet kerosene prices.

Asia’s benzene prices strengthened week on week to $1,282-1,290/tonne FOB Korea on 11 June, supported by an increase in downstream styrene monomer (SM) prices and the recovery in crude futures. Jet-kerosene prices in Asia rose week on week to $115.95-116.35/bbl FOB Singapore and $117.25-117.65/bbl CFR (cost & freight) Japan on 11 June, on limited supply. LAB prices were assessed at $1,820-1,840/tonne FOB India on 5 June, a $50-80/tonne decline from two months earlier, according to ICIS pricing.

The extended turnaround at the Reliance plant has resulted in a tightening of supply in the Indian LAB market, market sources said.

Reliance also operates a 120,000 tonne/year LAB plant at Patalganga, in Maharashtra state.

The shutdown at Reliance’s Vadodara LAB plant caused the company’s exports to decline significantly in the past three months, the source close to the company said.

“The company has no spot availability for export in June, and is only supplying contract customers outside India, so that it can meet its domestic commitments,” the source added.

India has an installed LAB capacity of 530,000 tonnes/year, an industry source said. Consumption of LAB totalled 500,000 tonnes/year in 2012, creating a shortfall of 40,000 tonnes/year.

Other LAB producers in India include IndianOil, Nirma and Tamil Nadu Petroproducts.

($1 = €0.75)

By: Prema Viswanathan
+65 6780 4359

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