Maintenance turnaround by IOCL projects Naphtha prices to rise in India

Naphtha prices in the Indian market has been on a declining trend with few exceptions since the first quarter of 2022. The weak buying sentiments of the downstream petrochemicals globally, especially in the Asia abetted the decreasing price of Naphtha in India. To improve the state of Indian Naphtha market, at its 300,000-bpd Panipat refinery in northern India, Indian Oil Corp plans maintenance that will shut down a naphtha hydrocracker for approximately 80 days and half of its crude processing for around a month. In addition, the state-owned Indian OIL corporation (IOCL) intends to perform month-long maintenance on half of its 300,000-bpd Panipat oil refinery beginning around October 26th.

The nation's leading refiner have shut down their naphtha cracker at its Panipat plant on Monday (23rd October 2022) for a revamp designed to increase its Ethylene production capacity. The cracker produces 857,000 tonnes of Ethylene and consumes approximately 2.3 million tonnes of Naphtha annually. During the shutdown period, according to sources the company is going to improve their Ethylene production capacity while dialing down the production capacity of Polypropylene.

Due to the poor performance of the downstream plastic and polymer industries, Naphtha prices in the Indian market decreased steadily during the Q3 of 2022. The prices of Naphtha in India were rising during October on the back of downstream demand rise, and the shutdowns of both refineries in Panipat is likely to increase the cost of Naphtha further in the domestic market.

According to ChemAnalyst, the refinery shutdowns mentioned above likely to increase the prices of Naphtha, Ethylene and Polypropylene in the Indian market for the 80-day maintenance period. The price of Ethylene is likely to ease, while Polypropylene prices to increase in the long run because of the capacity revamps in the above-mentioned refiners.