India’s Petrochemical Sector Eyes on Better Days After Relaxed Lockdown Restrictions

1. Edition: 18th April 2020 #TheChemAnalystExpress India’s Key Headlines •Sell Ready to Invest in A $6.4 Billion Gas Project Despite Covid Crisis •Brent Sheds Gains Hit by Surge in Inventories •Petrobras Shut 62 Offshore Platforms in Brazil •Natural Gas Prices Rallied by A “Fair Value” on Friday •Shell Reveals Its Plan to Become Net-Zero Carbon Company By 2050 Asia Pacific Chemicals Pricing (Key Products) •Benzene- Benzene prices witnessed a downtrend on Friday due weak downstream demand as several industries announced operational cuts. Prices of the product settled at $375/ tonne CFR India, down by around $15/ tonne. •Ethylene: Ethylene tumbled in Southeast Asia due to continuous decline in upstream crude oil backed by reduced offtake from downstream industries. CFR Prices of Ethylene in Southeast Asia settled at $335/ tonne, down by $25/tonne from Thursday. •MEG- Prices of MEG remained in pressure as demand outlook seems bearish amid as several players curtail their operations in their fight against coronavirus. MEG prices remained stable at $400/tonne CFR Southeast Asia. •Propylene- Prices of Propylene were pushed up in China amid rising demand from downstream Polypropylene industries where it is used in medical applications. CFR China prices for Propylene rose to $615/tonne, up by $ 35/tonne. Crude Oil Scenario The US oil market plummeted to 18-year lows and below $18 a barrel on Friday following a hike as the demand for oil witnessed a downfall with storage facilities touching their limits. The WTI crude fell to $28 a barrel with anticipations that the stocks may keep filling till May. Major oil producers decided to shut their wells as overwhelming storage facilities pose a major threat. As per the experts in the field, the US shale industry is expected to shrink by more than 2 million barrels a day as the crude oil continue to crash forcing oil producers to shut down their fracking rigs. Amidst Friday uncertainties in the oil market, the energy ministers of Russia and Saudi Arabia released a joint statement wherein they indicated about incorporating deeper oil production cuts to stabilize the prices. India’s Petrochemical Petrochemical Sector Sector Eyes on Better Days After Relaxed Lockdown Restrictions Eyes on Better Days After Relaxed Lockdown Restrictions Index WTI Crude Oil Brent Crude Natural Gas (U.S.) Units USD/bbl. USD/bbl. USD/MMBtu Prices 18.12 28.08 1.762

2. Exclusive News & Analysis India Petrochemicals Demand Face Downturn with Extension of Lockdown till May 3rd Although Indian players have turned optimistic as the country’s efforts in containing the contagious spread of the coronavirus are being widely appreciated, the battle is yet to be won! The uncertainty is still lingering the country’s petrochemicals market, where demand outlook seems bearish as the lockdown extends till May. Despite relaxed restrictions on certain businesses after 20th of this month, several downstream industries are likely to remain shut or work with less labor at reduced rates. Players Declare Production Halts as Demand Depresses Waning demand since the PM announced 21-day lockdown starting 25th March 2020 led major refiners, both state- run and private including Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL), and Haldia Petrochemical Ltd (HPL) to induce production cuts or shut units so as to balance inventory against the drop in domestic demand. As per the sources, sensing the demand slowdown, IOC is planning to shut down its 800 KTPA cracker located at Panipat, Haryana. HPL has also closed its steam cracker and polymer units fearing rise in inventory levels. BPCL has also reported that the company has reduced the run rates of the refinery-linked petrochemical units in Kochi and Mumbai to less than a third. On 15 April, Gas Authority of India Ltd (GAIL) confirmed the shutdown of its 400,000 KTPA polyethylene (PE) plant at Pata in Uttar Pradesh state due to overflowing inventories and logistical constraints. Downstream Players Await Relaxation Downstream industries such as packaging and plastics industry, auto components manufacturers and paints and dyes industries are eyeing on instructions from concerned authorities as the Indian government declared partial relaxation on certain sectors after 20th April. Several packaging companies like UFlex and Ecoplast have restarted partial operations at their factories after packaging materials were declared as essential goods in early April. Petrochemical Price Crash Petrochemical prices plunged to several years low after the onset of coronavirus in India. Subdued demand due to lack of buying orders and plummeting crude have put a huge dent to the Asia’s petrochemical industry. Players are anxious whether the lockdown will end by the stipulated time, and how fast the operations will get back to normal considering supply chain restrictions and expected labor migration may be other impediments for the recovery of the petrochemical sector. 0 Monthly Price Variation Methanol CFR-Kandla Benzene Phenol 90000 80000 70000 60000 50000 40000 30000 20000 10000

3. Industry Research International Plant Shutdowns •Taiwan To Delay the Restart of RFCC Until May Taiwan's Formosa Petrochemical has planned to delay the restart of its No. 2 residue fluid catalytic cracking (RFCC) unit located at Mailiao refinery from April 20 to early May. The decision of delaying the restart is being strongly liked to weak gasoline margins across the country. The unit has been shut since March 1 for turnaround. The plant has the nameplate capacity of 84,000 bpd. The company has already planned to make necessary cuts in its operating rates due to demand destruction after the restart takes place. •Petrobras To Shut 62 Offshore Platforms in Brazil In response to huge demand destruction in oil and gas sector, Brazilian oil and gas giant Petrobras has decided to halt operations at 62 platforms in shallow water fields in the Campos, Sergipe, Potiguar and Ceara basins. According to the company officials, these platforms are not in economic conditions to operate with low oil prices and hence it has become crucial to shut them. India plant shutdowns •Dhrangadra Chemicals Planning to Extend PVC Plant Shutdown Dhrangadra Chemical, Tamil Nadu is planning to extend the shutdown of its Polyvinylchloride (PVC) plant in Sahupuram, after PM Modi’s announcement about the extension of nationwide lockdown till May 3. As per the sources, the company is waiting for the first week of May to resume plant operations after the operations halted on March 25,2020. The PVC plant has the production capacity of 150 KTPA. •Blast in Baddi Industrial Area Amid the prolonged lockdown measures due to covid-19, Baddi industrial area, a town in Himachal Pradesh, reported a blast in one of its chemical tanks at its adhesive unit on Thursday. The sources said the blast took place inside the Pidilite Industries plant, in one of the three 200-kilolitre tanks containing vinyl acetate monomer (VAM). The build-up of noxious gases inside the near-empty tank led to the blast which killed a migrant worker. Global Plant Resumptions •Shell Resumes Operations at its Heavy Oil Hydrocracker The operations at Shell’s 211,270 barrel-per-day (bpd) Convent, Louisiana, refinery resumed this week. The heavy oil 45,000-bpd hydrocracker plant of Royal Dutch Shell Plc shut down on Saturday because of some technical issues. Mergers and Acquisitions •ADNOC Terminates Deal with UK’s Petrofac ADNOC, UAE’s national oil company has cancelled $1.65billion contracts with UK oilfield services firm, Petrofac. The two contracts were signed in February and ensured the delivery of gas processing facilities and platforms for the Dalma Gas Development Project by Petrofac. Petrofac agreed to the news of contact termination and stated that it is looking forward to working with ADNOC over the coming weeks to look for alternative solutions to the current challenges. The oilfield services firm also decided to cut its capex by 40 % and conserve liquidity in response to the collapse in oil market.

4. Strategic Investments •Shell Goes Ahead with A $6.4 Billion Gas Project Despite acute pressure on the natural gas prices post the pandemic, Shell has decided to invest on a $6.4 billion Surat Gas Project in Queensland, Australia. The project aims at production of about 90 million cu ft natural gas, which would be sold in both domestic and international markets. The Surat Gas Project is actually a 50/50 partnership between Shell and Arrow Energy which is a subsidiary to PetroChina. • Well Resources Commissions 300 KPTA Ionikylation Unit in Refinery A Canadian energy company Well Resources inc., has announced its plans of setting up 300 KTPA Ionikylation unit at Sinopec’s Wuhan Refinery. Ionikylation is a commercially viable, non-hazardous and environment-friendly alkylation process which utilizes a composite ionic liquid as the catalyst and a carbon steel equipment. The plant would be the world’s first commercial scale revamp from Hydrogen Fluoride (HF) based alkylation technique. The unit got commission on January 21, 2020 and is currently operating at reduced capacity because of demand destruction due to Covid-19. Latest Technological Investments •Carbios And TechnipFMC Work Towards Recycling Waste PET Plastics TechnipFMC recently announced that it has offered its operating center in Lyon, France to assist Carbios in building a plant aimed at demonstrating Carbios’ Enzymatic Recycling Process. The technology will make the use of appropriate enzymes to recycle waste PET (Polyethylene Terephthalate) plastics into its monomers which can be further repolymerized into PET with same properties as its parent. TechnipFMC will provide services such as procurement, engineering, advisory and supervising the construction work. Construction of the plant is likely to start within this year and the plant is expected to remain operational by 2021. Carbios’ collaboration with TechnipFMC has been very valuable and the technology has been proven to be efficient in recycling PET plastics. •Shell Comes Up with A Plan to Become Net-Zero Carbon Company By 2050 Royal Dutch Shell has planned to become net-zero carbon company by 2050 or before by investing in more green energy which would enable it to reduce carbon intensity of its business. The company is thinking with a long-term perspective amid the Covid-19 pandemic and is hence determined to curtail the carbon intensity of its products by 50% within 30 years to reach 65% by 2050. The company is targeting to shift its business idea from oil and gas to selling clean energy products such as renewable energy and biofuels. 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 email at sales@chemanalyst.com

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