21 days India lockdown: Impact on the chemical industry

How will the 21 days India lockdown affect the chemical industry?

The on-going 21 days lockdown in India, to control the spread of coronavirus, is expected to stagger the growth of the Indian chemical industry. The shutdown in China earlier this year had already led to the global economic slump, further, the 21 days lockdown will hit the country’s economy hard. The magnitude of the impact is likely to be severe with a wide range of sectors being affected: chemicals, pharmaceuticals, construction, textiles, food, beverages, transport, and entertainment to name a few.

India went into complete lockdown from 25 March 2020 to combat the COVID-19 pandemic. Social distancing is the only way to control the spread of the highly infectious coronavirus disease. The lockdown will be effective till 14 April 2020 and can be extended based on the situation then.

Why is chemical production/supply low during lockdown?

  • Restriction in the public and private transport
  • Social distancing practices
  • Issues with raw material sourcing
  • Low attendance of the workforce at the manufacturing units
  • Difficulty in getting approvals/permissions

Lockdown and its impact on different chemical sectors

India coronavirus lockdown for 21 days and the restriction of transportation within the country has majorly affected the chemical industry. The chemical industry is highly diversified and the effect could be felt across various sectors. The corona impact on chemical industry:

Pharmaceuticals: The 21 days nationwide lockdown has hit the supply chain of medicines, creating fear among Indian pharma companies. The panic continues as there is a possibility of shortage of drugs and other pharmaceutical ingredients supply. The restricted public and private transport, and the social distancing practices have made chemical sourcing difficult. The dropping production capacity of the pharma industry is a further threat as it’s directly linked to the public health. The production of other chemicals India are also affected.

The Indian pharma industry will experience further strain after the partial removal of the ban on exports of hydroxychloroquine and paracetamol. This move came after the US President Donald Trump’s request to supply the anti-malarial drug, hydroxychloroquine to the US.

Organic and inorganic chemicals: In accordance with the nationwide lock, the Ministry of Home Affairs issued an order to stop the manufacturing activities for the next 21 days. However, the manufacturing of essential commodities remains unaffected. As chemicals are not categorized as essential commodities, the chemical production has been stopped all over the country.

Most of the chemical companies, including India’s chemical giant Tata Chemicals, have stopped chemical production. Tata Chemicals is India’s largest chemical producer, the closedown of its manufacturing units will affect the production of some of the important chemicals that include:

Chlorine: Chlorine is an antiseptic commonly used in the pharmaceutical industry for the production of medicines.

Sodium hydroxide: Sodium hydroxide is a major chemical used in the production of soaps and other cleaning products.

Sodium carbonate: Sodium carbonate is used in the production of a number of personal care and cleaning products.

Silicates: Silicates are used in the production of glass and ceramics.

Phosphates: Phosphates are widely used in the pharma industry for the production of medicines. Phosphate salts are used for bowel cleansing, relief from constipation, heartburn, etc.

Chromates: Chromates are commonly used in chrome electroplating.

Percarbonates: Sodium percarbonates are used in kitchen cleaning, fabrics, and carpet cleaning products.

Sulfuric acid: Sulfuric acid is widely used in the manufacture of a number of products; some of them include: fertilizers, synthetic detergents, sulfate salts, drugs, nitric acid, dyes and pigments, and explosives.

Increasing demand of isopropyl alcohol: The rapidly spreading coronavirus disease has spiked the demand for hand sanitizers, thus, increasing the demand for isopropyl alcohol, a key product ingredient in sanitizers. The shortage of isopropyl alcohol has led the government to urge the private and public sector units to increase the manufacture of sanitizers and disinfectants.

Recently, an official from Deepak Fertilizer and Petrochemicals Corporation Limited (DFPCL) said that the company has decided to increase isopropyl alcohol production to meet the public requirement. Similarly, sugar mills in North India have also started the production of ethanol to increase the hand sanitizer production in the country. Some private sugar mills across the country have requested the government to issue licenses for ethanol production, thereby increasing the production of hand sanitizers. The estimated capacity of the hand sanitizers produced by them collectively will be about 15,000 liters per month.

Gas and LNG: India’s complete lockdown has hit the LNG demand hard. According to Vidur Singhal, Senior Research Analyst, the daily gas consumption across the sectors in 2019 was 151 million cubic meters per day, the demand is expected to reduce by 18-20% post lockdown. The dropping LNG demand may be a long-term risk.

He further added that gas aggregators are in a tight spot and LNG buyers declared Force Majeure after the port operations stopped. Force majeure are contractual clauses that refer to the occurrence of an event that is outside the reasonable control of a party and which prevents one or all of them from fulfilling those obligations.

Oil products and refining: In a recent report, Qiaoling Chen, Research Analyst, estimated that global demand for gasoline, jet fuel, and diesel will reduce by 25%, 33%, and 13% respectively by the second quarter of this year. He also predicted a decline in the demand for fuel oil by 8%, whereas the drop in refinery gas demand will be up to 20%.

India to invest $1.3 billion  to cut the supply of APIs from China

India is the world’s largest producer of generic drugs and imports active pharmaceutical ingredients (APIs) and pharma intermediates from China. The recent coronavirus outbreak in China which rapidly spread across various countries in the world has hit the global supply chain hard; this majorly affected the drug supply in India. To further reduce the dependency on China, the Indian government will fund $1.3 billion to strengthen the country’s API production. This move will ensure to maintain the drug manufacture/ supply chain working at an optimal level. Previously, about 70% of India’s APIs requirements were taken care of by China.

China is the world’s largest supplier of APIs and intermediate pharma ingredients and is the export partner for 189 countries. The COVID-19 outbroke which initially started in China, has led to the other countries slowly cutting down their dependency on China for the supply of APIs and other pharma intermediates. The real picture of the global demand/supply chain of the pharmaceutical market can be estimated only when business resumes as normal. The impact of corona and chemical industry experiencing the slump will continue until a vaccine is created for COVID-19.

How to improve the sourcing of research chemicals during India lockdown

Nationwide lockdown affect has brought India to a standstill with complete restriction of movement. This condition has made it difficult for the research institutes to source chemicals. About 20 research institutes in India are conducting trials to find the COVID-19 vaccine. India is lagging behind when it comes to using technology in the chemical industry. Countries like the US and China have advanced technology integration in their chemical industry with complete digitization. Is the current scenario an indication that India should integrate advanced technology in its chemical sector? Will complete digitization help us handle such critical situations with ease in the future?

Use lockdown period productively

Lockdown is for a cause! To stay safe and to break the chain of coronavirus. As we all have gone into self-isolation mode, let’s consider this time as an opportunity to improve our skills and accelerate our career growth.

Hone your technical skills: In the ever-changing industry, let’s keep up with trend by learning the latest technology. Improving our technical skills will help us do the job easily, quickly, and confidently.

Improve communication: In today’s world, technical skills alone won’t help you to achieve success. Good communication is important to sustain in the highly-competitive world today. Effective communication maintains strong, lasting working relationships, whereas, poor communication may lead to frequent misunderstanding. Let’s use this lockdown period to improve our communication.

Expand your network: Let’s connect with people across the world through various social platforms. Expanding the professional network is important to grow the business.

Learn technology: We live in the technology era, it is important to learn basic technology like web navigation, electronic presentation, etc. If you are not good at technology, let’s utilize this time to learn the basics. There are hundreds of online courses available that’ll help you learn what you are looking for.

The coronavirus India is spreading rapidly with the infection rate nearing 5000 people, and more than 100 deaths. The only way to stop the spreading of this infection is to practice social distancing and stay home. Stay home, stay safe.