LONDON (ICIS)--The Indian sulphuric acid market opened 2019 on an uncertain note, after it was reported the government of the Tamil Nadu region has appealed against a ruling ordering the Verdanta-owned Sterlite Tuticorin copper smelter - a key source of sulphuric acid in India - be reopened.
The smelter – India's largest – was closed in May 2018, after the Tamil Nadu government refused to renew its consent to operate, on environmental concerns.
In late December, a National Green Tribunal (NGT) in India found in favour of Sterlite's appeal against the original closure of the 1.2m tonne/year unit, ordering it reopened.
On Wednesday, however, local media reported the Tamil Nadu government lodged an appeal with the Indian Supreme Court against the NGT’s ruling, leading to further uncertainty in both the Indian sulphuric acid market, and the wider copper industry.
According to reports, the Tamil Nadu government states the NGT has no jurisdiction to hear the matter on the Sterlite plant.
Because the plant has been sealed since May, the condition of the unit – and therefore how long it will take to restart – is currently unknown.
It appears unlikely that the plant will be fully operational until at least the second quarter of 2019.
The Tuticorin smelter predominantly serves local markets, and the closure meant southeast Asia became reliant on imports in mid-2018, leading to a run on product amid already-tight global supply, and a subsequent spike in prices.
However, in the interim, many of Tuticorin’s buyers turned to end-use products, rather than increase their sulphuric acid consumption.
Only an estimated 200,000 tonnes of increased sulphuric acid demand resulted from the closure.
Global supply is expected to remain tight throughout the first half of 2019, particularly in Asia.
With a large amount of carry-over volumes once again in Japan, and with heavy quantities of South Korean and Chinese material already tendered for 2019, free spot volumes in much of Asia are expected to remain scarce next year.
Coupled with this, 2019 will mark a heavy maintenance schedule in Japan and South Korea, in line with the typical two-year cycle.
Fresh tonnage from Tuticorin would help relieve supply pressure in the market, although this is not expected to become apparent until the second half of 2019.
The impact is expected to be significant enough across the year that Indian buyers delayed contract discussions.
Despite the appeal process extending across many months, the majority of international suppliers have already built the prospect of Tuticorin reopening into their 2019 planning.
Focus article by Andy Hemphill.
Additional reporting by Mark Victory