India to seek PTA from alternate sources as BIS norms stall imports from China

Indian buyers will actively look for purified terephthalic acid from alternate sources after the Bureau of Indian Standards import certification norms set in from June 22, leaving Chinese supplies out of reach, sources told S&P Global Commodity Insights this week.

The BIS norms for PTA set in from June 22 after the Indian government did not extend the deadline for import certification, traders said.

In the run up to the deadline, market participants were expecting an extension to be granted given the large volumes of PTA sourced from China.

"QCO [quality control order] is imposed, there won't be any notice further as if there was an extension then we [would] see [a] notice otherwise not," a source in India said referring to the absence of any notice on the Department of Chemicals and Petrochemicals website.

India had deferred the deadline for implementation of mandatory import certification for n-butyl acrylate and toluene by six months, S&P Global Commodity Insights reported earlier.

China has been one of the largest suppliers of PTA to India as domestic demand in the country continues to grow with local production unable to cater to the increasing consumption trends, traders said.

From January to April 2023, India imported around 543,060 mt of PTA of which 336,953 mt, or around 62% was from China alone, data from India's Department of Commerce website showed.

Other options

Suppliers in several other countries such as Taiwan, Indonesia, Thailand and South Korea have procured the certification, sources said.

With China out of the race for now, India may have to turn to South Korea to fill in the gap for its PTA supplies, sources said.

"Seems like lots of Korean traders are hearing inquiries from India," a PTA producer in South Korea said.

While the Indian market may seem a lucrative option, some suppliers in South Korea are not too excited with the prospect of catering to India's PTA demand.

Supplying to India may mean sacrificing on other export markets such as the US or Europe, a trader in South Korea said.

With other markets not getting South Korean supplies, they may turn to China instead, the trader added.

Furthermore, South Korean producers may not have the capacity to supply to India at the moment, a producer in North Asia said.

South Korean PTA was not available for India as most of it was exported to Turkey, the US and Europe, the producer added.

China not perturbed

The recent developments have not flustered Chinese producers much, a PTA producer in China said.

"I think the BIS extension [not coming through] has little effect," the producer said, while adding that it was expected by the market.

Market participants also said that China could sell South Korea its PTA, which could then be diverted to India, though that would eliminate the cost benefits seen previously.

"[India can get PTA from other sources] but at a higher price, not at the dumped prices by China," an end-user in India said.

However, some impact of the BIS norms will surely be felt in China, a Chinese trader said.

With exports to India slowing down, operating rates for PTA and polyester plants could start moving lower, the trader added.

In the week ending June 23, polyester plant operating rates were heard to be around 92% while PTA plant operating rates in China were around 81%.

Some key PTA producers in China could still aim to apply for the BIS certification, the trader said.

"They all are trying to get [the certification] and it will take 1-2 months to finish it," the trader in China said.