Page 128 - CW E-Magazine (24-12-2024)

Point of View

Indian LAB market
On a regional basis, Northern and Western India are the biggest consumers of LAB, with FY24 demand of the order of 230-kt and 200-kt,
respectively. Eastern India has seen a significant rise in LAB demand thanks to the mushrooming of a number of sulphonators and now
accounts for about 150-kt of LAB demand. The Southern market has also shown above average growth and now consumes about 120-kt.

Consumption is fairly equally divided between multinational companies (of which Hindustan Unilever is the largest, though all of production
is through third parties), and local ones (e.g., Fena, Ghari and Jyothi); between them they account for about half of Indian LAB demand. The
balance is in the hands of smaller, regional players mainly producing 90% active content LABS.
Tackling imports
Domestic LAB producers have been threatened by cheap imports that have squeezed margins and have gotten some protection thanks
to tariff and non-tariff barriers. Anti-dumping duties (ADDs) were imposed in November 2017 on LAB coming from Qatar ($47 per tonne),
Iran ($72 per tonne) and China ($24 per tonne), but these ended in April 2022. A fresh application for ADDs on imports from Iran and Qatar
was filed in November 2024 and is now being examined. A Bureau of Indian Standards (BIS) Quality Control Order (QCO) on LAB has been
in place since 2023 and restricted some imports in FY24.
In FY24, LAB imports fell to 233-kt – from 318-kt in FY23 – partly because Iranian producers were unable to get BIS certifications. The
conflict in the Red Sea, which restricted supplies from Farabi’s Yanbu plant in Saudi Arabia, and lower availability from CEPSA (Spain) due to
logistics and pricing issues, also contributed to the decline. Producers in Thailand and Qatar have, however, stepped in and gained market share.

India is arguably one of the most important and growing markets for LAB in the world today, and producers with surpluses are drawn
to it. In Europe, North America, and Japan, demand for LAB is at best flat, and the trend is towards milder, greener surfactants, including
ethoxylates and more exotic varieties. Markets in the Middle East and in Southeast Asia are also limited in their growth prospects, and the
existing surpluses are expected to only increase as new capacity comes up. According to estimates made by IOC and presented at the
Asian Surfactants Conference in Kuala Lumpur recently, the surplus LAB capacity in the Middle East will rise from ~400-kt now to ~500-kt
in 2025, while the surplus in East Asia will stay around 150-kt.

New capacity possibilities
Going forward, the volume of imports will rise for the simple reason that the markets need it. Unless, of course, other actives come to the
fore and/or expansion of domestic LAB capacity occurs – the latter either through incremental debottlenecking (which has limitations) or new
projects (by incumbents or new entrants). TPL is in the process of augmenting its capacity by 26-ktpa by FY26, and there are reports that
RIL will reopen its shuttered 60-ktpa Vadodara plant using an indigenously developed solid catalyst. This will augment domestic availability
by 86-kt – a significant addition but one that will not bend the rising imports curve, unless supplemented by new projects.

Refineries are prima facie well placed to enter the LAB business as they have the two raw materials required to make it: the kerosene
stream to make NPs and benzene. Demand for kerosene as a cooking fuel is declining, largely due to the excellent job done by the government
and the public sector oil marketing companies to take LPG to the far corners of the country, displacing use of kerosene. The main demand
now for the kerosene stream at refineries is to make aviation turbine fuel (ATF), but there should be enough in existing refineries and new
ones planned to set aside for this growing use and still make NPs. Furthermore, India is a large net exporter of benzene, while being a net
importer of several of its derivatives – LAB being one.

The justification given by the refiners for not undertaking LAB manufacture is the poor returns on the project, which they blame in good
measure on the competitive environment and the high technology licensing fees. The latter should not be seen as a deterrent, but a challenge,
and every attempt must be made to develop indigenous technology. The considerable resources invested in R&D and technology development
centres in national industrial research laboratories and public sector refineries can be brought to bear on this problem.

Alternates to LAB
India also needs to promote alternate surfactant raw materials. Alpha-olefins (AO) are an option and all of it is imported (aside of
1-butene for which domestic capacity exists). The time has come to consider a full range AO project that will produce detergent grade
alcohols (C12-16), as well as lower and higher olefins that have uses including for making polyethylene, plasticisers, lubricants, etc. India’s
demand for AO is approaching about 600-ktpa – the order of world-scale plants. The challenge here is that the technology is available with
a handful of companies (CP Chem, INEOS, Shell, SABIC), and they may be loath to license except as part of joint ventures.
Ravi Raghavan

128 Chemical Weekly December 24, 2024

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