Propane returns to Morbi, but rising prices slow ceramic makers' recovery

what happened

According to Moody's, large tile producers in Morbi, India, are once again switching between fuels. Varmora Granito has moved 80% of its plants onto propane as supplies rebound from the disruption caused by the Iran war in March. The company can also shift to LNG from Gujarat Gas if propane gets more expensive. Kajaria Ceramics, by contrast, has warned investors of fresh propane price increases and little clarity on any future drop in fuel costs.

Propane deliveries to the cluster stopped in March as the conflict disrupted Gulf energy chains and shipments through the Strait of Hormuz. Plants in the town went quiet on March 5 and stayed mostly idle until April 15. Kajaria said propane rose twice in the previous fortnight, including a jump of 12.5 rupees per standard cubic metre over two or three days, while natural gas fell by 5.5 rupees. Propane still sits about 5% below gas, yet the company expects further increases. Gas in Morbi climbed from roughly 50 rupees per cubic metre on February 28 to around 85.

Manufacturers are already passing costs on to buyers. Kajaria raised prices in Morbi by 18–19%, while estimates for the whole cluster reach 30–40%. Its northern and southern plants, where gas is cheaper, saw increases of 12–13%. Sources cited by Kajaria estimate that 40–50% of Morbi's 500-odd manufacturing units are still not operating.

why it matters

The story matters mainly for India's ceramics sector and regional fuel suppliers, but it shows how disruptions in Gulf supply chains quickly feed into local production costs and tile prices.

market impact

Propane and gas in India: rising fuel costs squeeze Morbi ceramic makers and lift tile prices

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