Reliance Industries Ltd (RIL) raised prices of at least seven key petrochemicals in the last quarter to offset higher crude oil prices and counter the effect of a weakening rupee. Bulk chemicals traders, suppliers for RIL’s petrochemical products and analysts tracking the company said it raised prices by 10-21% in the second quarter of this fiscal while year-on-year increase is 17-61%.
These products include purified terephthalic acid (PTA), monoethylene glycol (MEG), polyester staple fibre (PSF), partially oriented yarn (POY), polypropylene or high density polyethylene (HDPE) and linear alkyl benzene (LAB). PTA is a raw material used in making multi-purpose plastics. HDPE is used for packaging household and industrial chemicals such as detergents. Prices for PVC, or polyvinyl chloride, however, were cut last week.
Crude prices, which have been on the rise, are expected to touch $100 per barrel in a few months. The rupee, on the other hand, weakened further and settled at 73.76 against the dollar.
Sustained, substantial increase in crude oil prices has pushed up petrochemical feedstock prices over the past few months. Geopolitical situation and expectation of a tighter oil market have further impacted the raw material cost. Globally, petrochemical producers have absorbed a part of the higher feedstock costs while pricing products.
In January, RIL commissioned its refinery off-gas cracker (ROGC) complex of 1.5 million tonnes per annum (mtpa) capacity along with downstream plants and utilities, culminating its $16 billion refining and petrochemicals expansion plan that it embarked on in 2014. Commissioning of the plant will help the refiner double ethylene capacity and enter the league of top five petrochemical producers globally, in addition to lowering its fuel cost and boosting profits. There are nearly 270 ethylene plants globally with a combined capacity of over 170mtpa. RIL’s combined ethylene capacity is now close to 4 mtpa at five of its manufacturing sites.