Kanoria Chemicals to Set up a New Brownfield Formaldehyde Unit in Ankleshwar, Gujarat

On February 23, 2023, Kanoria Chemicals & Industries established a new formaldehyde plant in the pre-existing manufacturing site at GIDC, Ankleshwar, Gujarat.

The proposed formaldehyde facility will use cutting-edge metal oxide-based technology. The region’s and export market’s rising needs in a number of industries including engineering wood, textiles, agrochemicals, pharmaceuticals, etc., will be satisfied by this new capacity with better technology.

About the Company

Kanoria Chemicals & Industries Ltd (KCI) is a leading manufacturer of chemical intermediates in India with ISO 9001, ISO 14001, and OHSAS 18001 certifications. KCI has two manufacturing facilities: the first is in Renukoot, Uttar Pradesh, where it produces water treatment chemicals, chloralkali, and derivatives of chlorine; the second is in Ankleshwar, Gujarat, where it produces intermediates based on alcohol.

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Over 15 goods are included in the company's portfolio, with three of them having the largest market shares. Due to backward and forward integration, KCI also runs a 25MW thermal power plant at Renukoot, where it benefits from lower operating costs.

KCI has received the "CRISIL GVC Level 3" rating for its strong ability to create wealth for all of its stakeholders while implementing good corporate governance procedures.

Formaldehyde Price Trend

North America

Formaldehyde prices in North America saw a bearish market trend in Q4 2022, which continued into the following months. The price of formaldehyde dropped to USD 432 per tonne FOB Texas in December 2022. The pricing trend was further slowed down by weak market demand and a decline in US exports to the South American region.

The US market for formaldehyde was impacted by variables like lower feedstock Methanol pricing and decreased domestic demand. In addition, the downstream preservative industry's consumption of the market saw a sharp decline. Also, the gloomy market views were fueled by poor benchmark futures and limited buying activity. Low market fundamentals also reinforced the market's downward trajectory as the formaldehyde market traded at a slower rate.

Asia Pacific

Due to significantly lower demand than the previous quarter and mildly operating downstream sectors, the price of formaldehyde in China remained steady in the first two months of Q4 2022. Due to ample supplies of the Methanol feedstock and lesser bidding for new stock in December, the price fell.

The supply of formaldehyde was plentiful, and demand was weak, which contributed to a drop in the price of formaldehyde in the Chinese market.

The downstream businesses have enough inventory to meet demand from the market. influenced by adverse market trends, including excessive inventories, weak domestic demand, and dropping regional formaldehyde prices with weak market dynamics.

Europe

The price of formaldehyde in Germany fell throughout the course of the following months in Q4 2022 as a result of weak demand and unfavourable trading fundamentals. Due to adequate supplies and weak demand for the product, formaldehyde imports fell in Germany.

After importing items sooner than usual, retailers ended up with an excess of inventory, which had an impact on the market's fundamentals. Due to dismal economic concerns and weak market activity, formaldehyde demand is declining. Low netbacks, lowering production costs, and a weak demand front caused significant producers' profit margins and revenue to decline.

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Due to overstock and low interest from the preservation industry, the formaldehyde market declined as any upward price movement was restrained.

As per Procurement Resource, in the pre-existing industrial site at GIDC, Ankleshwar, Gujarat, Kanoria Chemicals & Industries built a new formaldehyde facility on February 23, 2023. Modern metal oxide-based technologies will be employed at the projected formaldehyde factory. This expanded capacity with superior technology will meet the region's and export market's growing needs in a range of industries, including engineering wood, textiles, agrochemicals, pharmaceuticals, etc.