Rising raw material cost has been a cause of concern for global market as climbing raw material costs have curtailed downstream manufacturers profitability. The trend of skyrocketing raw material costs has been observed throughout 2021. Recently, spot price of LNG rose substantially in Indian domestic market, meanwhile contract purchases remained modestly stable and more economical than spot prices. On the other hand, it has been observed that key players of LNG like Shell and Petronet were running their operations on LNG terminals at lower capacity due to sluggish demand by domestic market after sharp increase in LNG spot prices.

Global LNG market has been showing high volatility in key regions of the world. In Europe, geopolitical tension between Russia and Ukraine has become a major cause of concern for other European nations, which has led steep rise in price of contract purchase of LNG than spot market. Meanwhile in China, ample availability of LNG has prompted domestic buyers to opt for spot purchases rather than contract deals with European market. Indian market witnessed exorbitant rise in spot prices of Liquefied Natural Gas from Qatar, which remained above USD 30 MMBtu for several months in 2021. However, improved domestic production of LNG has been catering to the demand of India, and shielding local consumers from brunt of resolutely high prices.

As per ChemAnalyst, “Employing Dual Feed Crackers by downstream manufacturers ought to be more prudent in the current market scenario as Naphtha has become more economically feasible alternative than LNG. ONGC Petro-addition Limited (OPaL), a joint venture of ONGC, GAIL and GSPC, received green signal on Dual Feed Cracker in 2017, this joint venture would be more viable in current economic flow. However, industry experts have stated that, this overall market trend of low consumption and low availability, would ease after winter season i.e., by March or April. Furthermore, key players are also optimistic about the spot purchases, as the wide gap between the cost of spot and contract deal will also narrow down in coming months across Indian market.”