India's chemical and petrochemical industry is facing serious supply-side stress as LPG availability has dropped sharply amid ongoing geopolitical disruptions, industry representatives said.
Satish Wagh, Chairman of the CHEMEXCIL and Executive Chairman of Supriya Lifescience Ltd, told NDTV Profit that LPG availability has fallen to as low as 20% of normal levels, severely impacting industrial operations.
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This is due to the ongoing war in the Middle East between US-Israel and Iran. Since the outbreak of the Iran war, energy prices have shot up to multi-year highs. India's trade with the GCC region have been hit due to the blockade of the narrow Strait of Hormuz waterway.
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The disruption is particularly affecting processing units and downstream production of key chemicals such as propylene, isopropyl alcohol and acetone, which rely heavily on LPG and its derivatives.
Wagh flagged that the shortage of propylene, which is a critical by-product of LPG processing, has emerged as a major concern, with implications for the broader chemicals and petrochemicals ecosystem.
In addition, curtailed supply of key feedstocks like propane and naphtha is forcing companies to undertake significant production cutbacks, further tightening supply conditions across the sector.
Industry players warn that the impact could extend well beyond immediate output losses. "Reduced LPG supply can have a cascading effect across the entire value chain," Wagh said, highlighting risks to multiple downstream industries dependent on chemical intermediates.
The developments come at a time when supply chains are already under pressure due to disruptions in global shipping routes due to the ongoing war, raising concerns of prolonged stress for energy-dependent manufacturing sectors in India.
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