The Indian government has restored LPG supplies to industrial and commercial consumers to pre-war levels, supported by rising imports this month, according to a government notification issued late on 25 June.
New Delhi has also directed refiners to limit the diversion of propane and butane streams to LPG production and use them instead as petrochemical feedstock, reversing its earlier mandate to prioritise LPG output, the notification added.
The shift in policy has come on the back of India's rising LPG imports from the US, Kpler data show.
India is set to receive its highest volume of US LPG this month at 1.09mn t, making up 60pc of overall LPG imports, predictive volumes from Kpler show.
The US volumes include both term and spot cargoes booked by Indian importers over the last two months.
Supplies from Middle East also increased in June and currently total at 617,000t, up from 381,000t in May, but lower from 1.69mn t in February before the war started, Kpler data show.
Shipments from the UAE are set to hit 224,000t in June — the second highest supplier after the US. The UAE has been using shuttle vessels to move LPG from Adnoc's Ruwais terminal to Sohar in Oman, where it gets transferred to larger gas carriers.
India-bound Very Large Gas Carrier (VLGC), NV Sunshine, is carrying over 44,000t of LPG for state-run Indian Oil (IOC) for delivery at Dahej on 28 June, after conducting a ship-to-ship transfer on 16 June at Sohar in Oman, Vortexa and Kpler data show.
Most of India's LPG imports from the Middle East are undergoing ship-to-ship transfers near Sohar in Oman or the Gulf of Kutch near India, the data show.
Industrial demand
Typically, India's industrial LPG demand stands at 2.9mn t/yr, accounting for 9pc of the country's total LPG demand across sectors including hospitality, food services, agriculture, manufacturing, pharmaceuticals, healthcare and education.
In May, industrial LPG consumption was at 195,100t, down by 12.6pc on the year, but up by 4pc on the month, as supplies were restored to some extent, Indian oil ministry data show.
Bulk LPG supplies — delivered by tanker truck and stored on-site in large pressure vessels — to manufacturing, processing and refining users have been restored to 50pc of pre-war levels, the notification said.
India's annualised bulk LPG demand stands at 1.1mn t, or 3pc of overall LPG demand. Bulk LPG supplies totalled 10,800t in May, down by 83pc on the year and 9pc on the month, oil ministry data show.
New Delhi has also said the increased allocation of propane and butane streams for non-LPG uses will proceed without affecting domestic LPG availability, while keeping aggregate indigenous LPG production at no less than 40,000t/d.
Domestic LPG production had reached 52,000 t/d in May up from 50,000 t/d in April, a government official told reporters in New Delhi.
Support for petrochemicals
The new order will help raise output of key petrochemicals, including polypropylene (PP). Supplies of packaging material have remained tight, prompting Indian buyers to source from exporters in China and southeast Asia.
About 80pc of India's PP output was hit by feedstock curbs, Argus estimates show. Normalised feedstock supplies will allow several petrochemical plants, such as Mangalore Refinery and Petrochemicals (MRPL), to restart PP units. But an Indian producer said it would still take some time for domestic supplies to reach pre-war levels.
The easing of restrictions could also prompt the Indian government to reinstate import duties on petrochemicals, as prices in other parts of Asia have receded, a Mumbai-based trader said.
In April, New Delhi waived customs duties on 40 petrochemical products, including polyethylene (PE), polyvinyl chloride (PVC) and PP, to offset extra costs for domestic industries.
PP buying in the industrial belts of Morbi and Rajkot in Gujarat have slowed as an immediate impact, another Indian producer said.
Argus assessed PP raffia prices at $1,180-1,270/t cfr India for the week to 19 June, down from $1,350-1,430/t cfr India on 10 April. Argus assessed linear low-density polyethylene (LLDPE) prices at $1,210-1,270/t cfr India for the week to 5 June, compared with $1,430-1,500/t cfr India on 10 April.
