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While Petrochemicals Stay Muted, Refiners Forecast Complete Recovery in India’s Fuel Demand by the End of 2021

The Covid-19 pandemic rendered a significant downfall in the Indian petrochemicals industry which recorded significant losses in the first half of the current fiscal due to contracting economy. India’s gross domestic product (GDP) slid by 23.9% year on year in the first quarter ended June when the nation remained under the strictest lockdowns to contain the spread of the Covid-19 pandemic. Commenting on the market growth prospects of the petrochemicals industry, a trader remarked that Indian Acetic Acid continued to remain pressured amid weak buying confidence among consumers and arrival of cheap imported cargoes. Acetic Acid Ex-Depot Mumbai prices kept oscillating around INR 28000 per MT in the initial two weeks of September. The demand for Acrylonitrile Butadiene Rubber (NBR) remained largely muted due to mounting inventories while the market has seen limited activity in the past few weeks. However, domestic refiners seem to face the blows of economic uncertainty and demand weakness head-on by developing long-term strategies and channelizing their capex plans and maintaining the existing assets. Ashutosh Deshpande, vice president of country’s renowned private oil refiner Nayara Energy, stated at the Platts APPEC 2020 virtual conference that India’s diesel demand growth is likely to rebound to pre-COVID-19 levels by the end of 2021, although demand has significantly recovered from the April lows. He further stated that recovery in economic activity, good monsoon rains and upcoming festival season would pave the way for a better diesel demand.