Gas leak at LG Polymer India contained, may slow styrene demand.

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Petrotahlil — A styrene gas leak at a plant owned by South Korean chemical giant LG Chem's unit, LG Polymers India Pvt. Ltd., in the southern city of Visakhapatnam has been brought under control, but the disaster could slow down styrene import demand from the South Asian nation, market participants said Friday.

As India has extended the nationwide lockdown to May 18, styrene discussions had largely remained muted due to the absence of end-user demand and high local inventories.

Market participants had been eyeing the return of India, the second-largest styrene importer in Asia, to lend some support to feedstock styrene. However, the gas leak, which has killed 12 people and hospitalized more than 500 people, would postpone demand recovery and bring uncertainties to the market, traders added.

"Everything was brought under control by last night," a local administration official said Friday.

Amid thin trading, CFR India styrene was pegged at $588/mt on Friday morning, rising $2/mt from last Thursday and widening the spread to CFR China from minus $30/mt to minus $35/mt Friday, according to S&P Global Platts data.

LG Polymers India Pvt. Ltd., or LGPI, is one of the leading manufacturers of polystyrene and expandable polystyrene in India, with a nameplate capacity of 150,000 mt/year.

India has been under an extended COVID-19 lockdown since late March but some relaxations were given in parts of the country on May 4, depending on the seriousness of the pandemic in the respective areas. Polystyrene plants were heard preparing to fully resume operations.

LGPI imports styrene from South Korea and the US, about 10,000 mt/month on an average, according to a source.

Although the impact is limited given the volume, styrene prices are likely to fall again as buyers would take this incident as a chance to bargain, the source added.

The company's procurement for July styrene cargoes may be affected due to the incident as the company needed to investigate the situation. However, it had enough inventories at the plant to cover May and June demand if it decided to resume operations, said a source with knowledge of the matter. Company officials were not available to comment.

The leak first occurred on Thursday, when the plant was getting ready to reopen amid easing of some lockdown controls, local media reported citing an LG Chem spokesman and local officials.

People staying within a radius of 4.5 km to the chemical plant in South India were advised to use wet masks to cover mouth and nose to avoid the effect of gas inhalation, local municipal authorities said.

As the gas spread hundreds of people either fell unconscious or had breathing issues. Local officials have been trying to minimize the impact of the gas leak by spraying water.

The latest incident of the gas leak causing harm to the public is the second major incident after a gas leak at a factory of US chemical company Union Carbide. The previous incident occurred in the central city of Bhopal in 1984 and was reported to have killed thousands.

LGPI makes polystyrene and expandable polystyrene, which is used to make a range of consumer products like electric fan blades, cups and cutlery, and containers for cosmetic products, according to the company's website.

LG Chem bought the facility previously owned by Hindustan Polymers and rechristened the company as LG Polymers India Private Limited in July 1997.

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