India's Haldia Petrochemicals Ltd is looking to source feedstock naphtha from domestic refiners to shield itself from volatile shipping costs triggered by ship attacks in the Red Sea, the company's chief executive officer said on Wednesday.
The company, which owns a naphtha cracker producing 700,000 metric tons per year in the eastern state of West Bengal, sources 50% of its feedstock from the Middle East and relies on local refiners like Indian Oil, HPCL and BPCL for the rest of its feedstock needs.
While freight costs have now come off highs after spiking 30-40%, there is no certainty that costs will not rise again in the next 12 months, HPL's CEO Navanit Narayan told Reuters.
"It adds a lot of volatility to our imports and we are looking at domestic markets for buying feedstock," he added.
Clean Petroleum Product (CPP) tanker rates on the Middle East to Asia route have come down to about $70-$90 per metric ton in last week of March, compared with about $110 per ton earlier this year, trade sources said.
