Oxygen shortage slows down Indian chemical industry

8th June 2021

Oxygen shortage slows down Indian chemical industry

India’s ongoing second wave of COVID-19 infections has had a severe knock-on effect on its chemicals and related industries. As of 25 April, the Government has ordered that liquid oxygen can only be supplied for medical use and multiple chemicals producers have halted production of certain items because they are unable to source industrial oxygen.

Among the first casualties, on 28 April, was Paushak, a maker of phosgene-based speciality chemicals and intermediates. Oxygen is a critical raw material for the firm and it has temporarily suspended manufacturing for this reason.

More recently, fine chemical and API firm Hikal has halted production of an unnamed product from its Crop Protection division at Taloja, near Mumbai. The company said that it anticipates an impact on sales of the product in question and will work with customers to make up for the shortfall in delivery. Production will be ramped back up as and when industrial oxygen is available again.

The shortage of oxygen caused by crisis has impacted other major industries such as steel and oil, which usually do not have access to captive oxygen production on-site. It has also impacted their downstream customers like the automotive sector. Many of the major automotive OEMs in India announced shutdowns or reduced working days in May.

To address the crisis, India’s state-owned refineries have substantially diverted their production from industrial to medical oxygen, while others have ramped up the production of medical oxygen.

Whilst India normally has more than enough oxygen available, the sudden spike in demand has created major distribution issues. By early May, demand had risen from 700-800 tonnes/day to 3,500-4,000 and some believe that it could increase to 6,000-7,000 if the crisis continues as its current pace.

The COVID crisis is particularly acute in populous states like Uttar Pradesh, Gujarat, Maharashtra, Madhya Pradesh and the city of Delhi, which also house much of the chemicals and related industries. There are no official figures, but it seems likely that labour issues would have created major problems too as workers succumb to illness.

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