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RIL and ethane prices-II: Sunk costs in ethane delivery system
Jul 02: Find out more on the dynamics of global ethane demand and supply and their implications for RIL.
8In the gas vs. ethane debate, especially when both are imported into India, is the sunk cost of building an ethane delivery chain an advantage or a disadvantage for RIL?
8Gas is far more fungible than ethane, as its production will have to stay in sync with demand, particularly on account of the need for a captive evacuation system.
8On the other hand, the core economics of producing petrochemicals from ethane continues to remain attractive in relation to gas.
8The fact that Chinese companies are continuing to build capacities based on imported ethane is a vindication of RIL's strategy. But all this new capacity will continue to keep ethane prices high for the foreseeable future.
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