India Has to Formulate the Chemical Supply Chains, a Major Lesson Learnt from Pandemic

1. Edition: 28th April 2020 #TheChemAnalystExpress India Has to Key Headlines •Crude Collapses 24% As Storage Fear Haunts the Market •LG Chem to Invest 63 Billion Won Towards Expansion of CNT Production •ExxonMobil Reroutes its Manufacturing Units into Production of Hand Sanitizers •Indian Chemicals and Petrochemicals Industry Tops the Country’s Exporting Sectors •Indian Oil to Resume Work at Paradip-Hyderabad Pipeline Project Asia Pacific Chemicals Pricing (Key Products) •Benzene: Benzene prices continued to drift in South Asia amid bearish market sentiments and falling crude prices. CFR prices for Benzene in South Asia were assessed at $335/ tonne, down by $20/tonne. •Styrene Monomer: Sluggish demand as result of production cuts and shutdown in countries to curtail the spread of Coronavirus, has further pulled down the prices of Styrene Monomer to $595/tonne CFR China. •Acetone: Acetone prices remained firm in Southeast Asia on upsurge in demand as a solvent in pharmaceutical industries. CFR SEA Prices of Acetone were assessed at $640/tonne on Monday. •MEG: MEG prices in South East Asia edged marginally high amid recovery in downstream demand for the product. Prices of the products were assessed at $400/tonne, up by $5/tonne than on Friday. Crude Oil Scenario Oil prices faced another horrible Monday, with WTI prices sliding by more than 20 percent in early morning trading. Overwhelming oil storage and worsening demand are likely to hover over the oil prices more as the local governments across the world find no other option but to extend COVID- 19 lockdown. With rising number of positive cases weighing over the global oil demand, analysts predict that the global storages are going to reach their full capacities within the next three weeks. By Monday afternoon, West Texas Intermediate for June delivery fell 23%, to trade at $13.07 per barrel, after earlier trading as low as $11.88. Brent crude fell 6.9% to $19.97. India Has to Formulate the Formulate the Chemical Chemical Supply Chain Supply Chains, a Major Lesson s, a Major Lesson Learnt Learnt from from Pandemic Pandemic WTI Crude $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 Apr 16,2020 Apr 10,2020 Apr 13,2020 Apr 14,2020 Apr 15,2020 Apr 17,2020 Apr 20,2020 Apr 21,2020 Apr 22,2020 Apr 23,2020 Apr 24,2020 Apr 27,2020 Apr 1,2020 Apr 2,2020 Apr 3,2020 Apr 6,2020 Apr 7,2020 Apr 8,2020

2. Exclusive News & Analysis Chemical Supply Chains Will Undergo A Major Transformation Post Covid-19 The coronavirus pandemic has exacerbated an unprecedented shift in the choices of the industrialists after a significant halt in the supply chains across the Northern hemisphere. Battered by the lack of reliability and transparency issues, economies are rerouting their supply chains after China became the origin of the threatening pandemic that the world is trying to get rid of. Although, China has become quite successful in defeating the contagion after struggling for almost three months, analysts assume that the outbreak high lightened the need of the hour for the world to contract their reliance for the essential raw materials and Active Pharmaceutical Intermediates to a specific region and protect it from other vulnerabilities. With its severe impact on global supply chains, the major economies which had been making good money through trade flows, are now only left with containers stranded in the wrong locations as there is an indefinite delay in the overseas shipments. Impact on Indian Supply Chains •Growth in Longer Term The European Fine Chemicals Group, an association of API manufacturers in Europe EFCG estimates that more than 80% of chemicals used to make drugs sold in Europe are sourced from China and India. The group has been keeping a close eye such a heavy reliance for these essential raw materials since 2017, when an environmental crackdown by the Chinese government led to a wave of plant closures. Loss of China as a reliable source of raw materials which holds almost 25 per cent share would mean a greater share of India in the market, which currently stands at 3 per cent. Better research and development initiatives in chemistry and engineering will fetch India competitive advantage in the years to come. However, it solely depends on the country’s chemical players how they tap this value-creating opportunity and function to shape the future of the industry in India to push country’s trade performance. Post the outbreak, the Indian government is under a constant thought about fostering pharmaceutical infrastructure developments, granting environmental clearance, and providing tax exemptions and subsidies to support the local manufacturing of drugs. Government of India has decided to promote domestic production of key Starting Materials (KSMs) or Intermediates and Active Pharmaceutical Ingredients (APIs) in the country. The government is out with a scheme which will promote Bulk Drug Parks and involve the financial investment of INR 3,000 crore in the next five years. •Supply chain vulnerabilities The disruptions in supply chains existed much before the imposition of the lockdowns as the spread of Covid-19 across the world gave a major blow to the trade flows as soon as the virus originated in the Wuhan province of China. India relies heavily on China for raw materials. Certain Indian industries like pharmaceuticals (China satisfies almost 70 per cent of country’s active pharmaceutical ingredients (API) demand ), automobiles (China exports about 10-30 per cent of the raw materials and base components to India), chemicals and textiles are heavily dependent on China. This overdependency has become a serious issue for national health security, prompting the Indian government to set up a special taskforce to review the internal API sector as it senses possible shortages of volumes in the Indian market further leading to problems like skyrocketing import prices. Major Decision Points and Challenges for MNCs Right Now Revise targets and assumptions Strategize day-to-day challenges and create a long-term startegy Establish a monitoring process to update target and assumptions Manage liquidity and customer chain risk Protect workers and contractors Identify opportunities and look for competetive advantages Address supply chain disruption issues

3. Indian Chemical Exports Rise Remarkably in January- April Period, Union Minister Congratulates the Industry Indian Chemical exports rose by 7 per cent to 2.68 lakh crore by value in the January-April period of the last fiscal as announced on April 26,2020, by DV Sadananda Gowda, the Union minister of Chemicals and Fertilizers. The minister also congratulated the Indian chemical and petrochemicals industry on becoming the top exporting country for the first time. The export contributed to 14.35 per cent of the total country exports. • Industry Research Global Plant Shutdowns •Rosneft’s Kuibyshev Halts Oil Refinery for Maintenance Rosneft has announced halt in operations at its Kuibyshev refinery until June 1 for maintenance. Although, the exact date for resumption of this turnaround has not been revealed. As per the authorities, the prime purpose for this maintenance turnaround is to uplift the plant’s efficiency for better profit intake. The oil refinery at Kuibyshev consists of plant capacity of around 7 million tonnes of oil product. •Goodyear announced permanent Shutdown at Gadsden, Alabama Facility Goodyear, one of the largest downstream company of elastomer, has announced to permanently shut its Gadsden Albama facility involved in tyre manufacturing. According to the company, this permanent turnaround is a strategy to come back in business by curtailing the production in tyre segment, which has been facing a constant decline since years. Goodyear believes that this decision can lead them to save $130 million in 2021. •Viva Energy Shuts Petrol Plant Viva Energy has shut two units in its refineries in Geelong as the players find no other way to curb the supply glut faced due to demand destruction caused by the coronavirus outbreak. The two units would include the refinery's Residual Catalytic Cracking Unit and other is an associated processing unit. The company's 120,000 bpd Geelong refinery is second largest of Australia's four refineries and satisfies about 10 per cent of the country's oil product demand. India Plant Shutdown and Resumptions •Indian Oil to Resume Work at Paradip-Hyderabad Pipeline Project Indian Oil Corporation (IOC) Ltd. has resumed work on its prestigious INR 3800 crore, cross-country Paradip-Hyderabad petroproduct pipeline project in Andhra Pradesh and Odisha. The operations restarted recently after the Central government permitted certain relaxations during the nation-wide lockdown. After the approval from the concerned authorities, the work resumed with limited manpower and necessary precautions. The project is aimed at improving availability of petrol, diesel, kerosene, and aviation turbine fuel in the region through supplies from its Paradip refinery to the demand centres in Odisha, Andhra Pradesh and Telangana. The pipeline has been designed to handle 4.5 million tonne products annually. •Coromandel International Resumes Fertilizer Production Coromandel International (CIL), a leading Indian fertilizer importer and manufacturer has resumed fertilizer production at its Vishakhapatnam unit after relaxation in lockdown restrictions by the Central government. The company recorded a significant reduction in its output at the end of March due to lockdown and reports that its Kakinada facility is still running. The company is one of the leading suppliers of phosphate-based fertilizers in India, with production capacity of 2.94 million tonnes in 2018-19 as per its annual report. The annual capacity of the company is 3.5 million tonnes of phosphate fertilizer, which includes DAP, SSP and NPKs.

4. •Building of Suven Pharmaceuticals Ltd. Catches Fire A major fire broke out at a Suven Pharmaceutical Ltd’s R&D unit at Jeedimetla, Hyderabad on Sunday evening around 4:30 pm. Ten employees were inside the pharmaceutical company when the fire broke out. There has been no news of casualties after the incident took place as all the workers escaped on time. Jeedimetla Station Fire Officer, Subash Reddy stated in an interview that the main cause of fire was a chemical reaction that took place inside the plant which in no time led to explosion of the reactors causing the outbreak of fire. Major Covid-19 Related Projects •ExxonMobil Puts Manufacturing Units into Hand Sanitizers Production On Friday, ExxonMobil reconfigured its manufacturing units in Louisiana to produce hand sanitizers in order to donate the essential commodity to the Covid-19 hit Louisiana, New Jersey, New Mexico, New York, Pennsylvania and Texas. ExxonMobil will produce around 160,000 gallons of medical grade hand sanitizer in its bid against the pandemic. CEO Darren Woods announced that ExxonMobil’s employees are striving hard in the world’s fight against this pandemic. The company also ramped up the production of IPA (isopropyl alcohol), which is a key ingredient in sanitizers by about 3000 tonnes. Strategic Investments •LG Chem to Expand Carbon Nanotube Production by 1,200 Tons Koreas, LG Chem announced on April 27 its plan to invest about 65 billion Won by the first quarter of next year to expand carbon nanotube (CNT) production by 12000 tons at its plant in Yeosu. The company’s move is aimed at targeting the global Electronic Vehicles and CNT markets. After the expansion, LG Chem will have a total CNT production capacity of 1,700 tons. CNT is an advanced material matching its electric and heat conductivity with copper and diamonds and possessing intensity that is 100 times that of steel. Its remarkable properties make it highly useful in lithium-ion batteries, semiconductors, automobile parts and aircrafts. Get the Chemical and Petrochemical Industry News on Daily Basis, Weekly-Trend & Forecast and Monthly-Analyst Views Subscribe Today! News on WhatsApp/WeChat/Mail First 15 days free news! WhatsApp No. +91-9914868686 For sales related query, dial +91-9958299626 or +91-8882336899 or email at sales@chemanalyst.com

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