IOC Compelled to Seek Early Spot Tender of Petrochemicals Following FCC Issues

Sturdy demand for Polypropylene (PP) in contrast to the lower production of its feedstock Propylene has compelled Indian Oil Corporation (IOC) to outsource it from the international market. Issues concerning operations in its Fluid Catalytic Cracker (FCC) at Paradip refinery is observed as prime cause behind the low throughput.

The abrupt shortage of Propylene has even resulted in the shutdown of one of the production lines in the integrated PP plant in East India of capacity 700,000 tonnes per year.

The other line is expected to continue operations until the existing inventories of Propylene are exhausted. To abate further hurt to its production margins, IOC has issued advanced tender for Propylene delivery at Paradip in February.

Comprehending the robust PP demand in the country amidst the limited availability of its feedstock, it is expected to continue procuring Propylene imports for few more months. Since the reduced output at its FCC units is expected to hinder the production of gasoline also, IOCL has issued an unusual spot tender underlining the procurement of around 134,000 tonnes of gasoline for the period of December-January.

The company has demanded 33,000-35,000 tonnes of gasoline for 26-29 December whereas 30,000-32,000 tonnes of gasoline for 1-2 January at a single port. In addition, IOC is also heard seeking 30,000-32,000 tonnes imports at Kochi and Chennai ports in between 7-8 January.

As per ChemAnalyst, “Since OPEC has announced ease in its production cuts from January, the increment in production of upstream across the globe is anticipated to provide a marginal ease to the low availability of petrochemical feedstocks in the country.”