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By Seng Li Peng and Nidhi Verma
SINGAPORE/NEW DELHI (Reuters) - Reliance Industries
The plant, located in Gujarat, is currently operating at about 800,000 tpy capacity, and the rest of the project's capacity set to come on stream before the end of this financial year in March, one of the people said. The petrochemical is primarily used in polyester and polyethylene terephthalate (PET).
The main feedstock for paraxylene is heavy naphtha, a crude-based product which can also be converted into reformates, a blending component for high-octane gasoline.
At full capacity, Reliance's paraxylene plant would require 2.7 million tonnes per year of naphtha - reducing the firm's ability to export the product and making it likely that the Indian conglomerate will have to resort to imports of heavy naphtha, the trade sources said.
The people declined to be identified because they were not authorised to discuss the matter publicly.
Reliance did not immediately respond to Reuters' requests for comments.
"Previously, Asia was not getting much heavy naphtha but these days, Russia is able to supply heavier grades of naphtha," said one Singapore-based trader.
While the short-term supply outlook for naphtha in general is tight in Asia due to India cutting back exports, refinery maintenance, outages and a lack of alternative feedstock to replace naphtha, the long-term view is that the feedstock will be in excess.
"The global market for naphtha will be over-supplied until at least 2020," IHS Markit said in a report, projecting global demand for naphtha (including natural gasoline) to be 1.18 billion tonnes in 2017.
(Reporting by Seng Li Peng in SINGAPORE and Nidhi Verma in NEW DELHI; Editing by Kenneth Maxwell)