Fuel oil prices move up by 30%

Steep increase in crude oil prices in recent months has started taking its toll on industrial raw materials. Prices of many petrochemicals, polymers, fuel oil, feed stocks, like Naphtha, and various chemicals and solvents are on the upward move. Some of these commodities have gone up by 10-30 per cent in the last few months.

Rupee appreciation against the dollar has helped only to some extent, as the rise in crude oil prices is much steeper. Local refineries decide on the price by bearing in mind the landed cost of the imported material. Competition from foreign oil companies is, however, helping cap domestic prices.

Worst affected is fuel oil or furnace oil. "While fuel oil was priced at Rs 17,270 a tone (ex-Mumbai) in early June, it is up nearly 30 per cent to Rs 22,050 a tone in November," said an official of government-run oil company Bharat Petroleum. Many plants are run on furnace oil, and the price rise is affecting their overall cost structure.

The trend, however, is not that bad for Naphtha, an important feed stock for many industries. Since June, its price is up only about 5 per cent at Rs 32,990 a tone.

Nikunj Dhanuka, managing director, IG Petro, said, "Prices of crude oil-based raw materials have not increased to the extent of rise in crude oil, which is up from $70 to $95 in a short time. The reason China is not ready to pay higher price for these materials is that international prices have not moved up to that extent."

Dhanuka has also observed this trend in petrochemicals like pathetic anhydride, PTA and PET. The average price rise in these products has been 5-10 per cent in last one month or so.

Since prices in India are decided with the import cost in mind, the consumption has continued unabated. So is the trend China and Middle East countries, where the raw materials are used abundantly.

High oil prices are worrying the US and western countries more. Dhanuka feels if oil prices are sustained at higher levels, the prices of petrochemicals will go up eventually by the same degree.

In some selected items, especially ethylene and propylene based products, prices are moving higher than 10 per cent. MEG is in short supply as the leading manufacturer has its shut plant for unknown reasons. In Mumbai, monoethylene glycol (MEG) was quoted at Rs 45 a kg three months ago.

It is now quoted at Rs 65. High prices also tempted some manufacturers to produce MEG while temporarily halting the production of other petrochemicals. In the same vein, the price of toluene is up from Rs 37 to Rs 46 a kg in the last three months.

Due to shortage of acetic acid, the prices of the acid and that of its derivative, vinyl acetate monomer (VAM), have gone up. In the last three months, VAM has gained 40 per cent to Rs 70 a kg. Even feed stocks like caprolactum are becoming expensive. GSFC raised the feed stock's price by Rs 1.50 to Rs 112 a kg from November 1.

UPWARD MARCH

Prices of many petrochemicals, polymers, fuel oil, feed stocks such as naphtha, chemicals and solvents are moving upward

Fuel oil or furnace oil is up by almost 30 per cent to Rs 22,050 a tonne in November

Since June the price of naphtha has gone up by around 5 per cent to Rs 32,990 a tonne

Prices of ethylene- and propylene-based products have moved up by more than 10 per cent