Naphtha demand slides further on increased availability of natural gas

07-Sep-09

Increased avails of natural gas have steadily demoted the status of naphtha as the preferred feedstock among power and fertiliser consumers. The downtrend in naphtha demand is projected to continue after falling in the fourth consecutive month – July. Domestic demand in July saw a decline by 19.4% against the same month last year. Despite the prevailing price of naphtha in the domestic market being lower by about Rs 3/ltr than diesel priced at Rs 36-37/ltr, demand in July continues to dip after seeing a fall of 11.5% in June. Increased avails of natural gas from Reliance Industries Ltd’s KG field, that began pumping earlier this year, reduced naphtha demand and imports by 59.9% in July. Reduced intake by fertiliser, power, and steel plants as well as major dip in imports by Reliance and Haldia Petrochemicals have also contributed to the decline in July.