Morbi Ceramic Industry: 142 Units Restart in 2026

Why Morbi’s fuel situation matters

Morbi’s ceramic cluster is a major gas-consuming industrial hub in Gujarat and is often described as one of the world’s largest ceramic production clusters. In early 2026, global energy volatility and supply disruptions linked to geopolitical tensions tightened the availability of liquefied natural gas (LNG) and related fuels. That spillover reached Morbi, where ceramic manufacturing depends on steady, high-heat fuel for kilns and drying. Gujarat Gas Limited (GGL) said it has stepped up efforts to keep fuel flowing and to help manufacturers resume operations. The company’s latest update said 142 ceramic units are currently operational after coordinated measures with the Morbi Ceramic Association.

What triggered the disruption in early 2026

The supply strain built up after February, when Morbi’s industrial fuel use was split between piped natural gas (PNG) and propane. Before the crisis, 377 industrial consumers in Morbi were using PNG supplied by GGL. Alongside them, around 415 units depended on propane supplied by oil marketing companies such as Indian Oil Corporation (IOCL), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL). These propane-dependent units accounted for nearly 70% of total daily fuel consumption, estimated at about 5.6 MMSCMD in natural gas equivalent.

As March began, global LNG availability came under pressure due to geopolitical tensions, including the US-Iran conflict cited in company and media updates. GGL said its supply increased in early March, but disruptions in LNG availability led to constraints. In response to central government directions, GGL curtailed industrial supply to approximately 80% of the average consumption of the previous six months. Several units then voluntarily suspended operations from mid-March, as higher production costs coincided with restrictions on propane availability and higher freight rates.

GGL’s measures to stabilise supply

GGL said it engaged with ceramic manufacturers to support a shift from propane to natural gas where feasible and arranged additional supplies despite elevated international prices. The company also stated it continued distribution in April in line with government norms. To sustain volumes, GGL said it sourced adequate gas from international markets outside the Middle East at prevailing rates.

In its statement, GGL positioned the response as a joint effort with industry representatives to address pricing and supply issues as operations normalise. The company also highlighted the high level of LNG prices in global markets during this period, placing the prevailing range at $18-20 per MMBtu.

142 units operational: what the number indicates

GGL’s update said 142 units are operational following the coordination between GGL and the Morbi Ceramic Association. The number reflects partial restoration of activity after the mid-March disruptions, rather than a full return to pre-crisis operating levels. Some reports during the disruption period pointed to broader shutdown risks. PTI reported that industry representatives warned of closures due to fuel shortages and referenced estimates of factories likely to close if supplies did not resume by a specific mid-March deadline.

Separately, another report said Gujarat Gas invoked a force majeure clause on certain industrial gas supply agreements as regasified LNG (R-LNG) became constrained due to the impact of conflict conditions in West Asia, while IOCL halted propane supply in that period. These details underline why the return of even a part of the cluster to operations is being tracked closely.

Policy and regulatory actions that shaped factory operations

State and central measures also influenced how factories managed the shortage. The Gujarat Pollution Control Board (GPCB) issued a circular on March 5 allowing industries dependent on gas-based utilities to temporarily switch to approved fuels where gas supply had fallen. The relaxation was stated to remain in force for three months, with a review after that.

At the central level, the Ministry of Petroleum and Natural Gas directed oil refineries on March 5 to maximise use of propane and butane streams for the production of liquefied petroleum gas (LPG) and supply it to public sector oil marketing companies for distribution to domestic consumers.

Broader industry and market context in Gujarat

The impact of constrained gas availability was reported across multiple gas-intensive sectors in Gujarat, including ceramics, textiles, glass and chemicals. Gujarat Gas supplies piped natural gas to around 4,500 factories across its 27 city gas distribution licences spread across six states and one union territory, according to the report included in the provided text. This matters because even short-term import disruptions can cascade into industrial output, fuel switching, compliance requirements, and working-capital stress.

Another development during the supply constraint period came from a peer company. Adani Total Gas Ltd (ATGL) revised pricing for excess natural gas supplied to certain industrial customers, cutting the price to ₹82.95 per standard cubic metre (SCM) from ₹119.90 per SCM, effective March 16, to pass on lower upstream prices during the constraints.

Key facts at a glance

Market impact: what changes for manufacturers and suppliers

For ceramic manufacturers, the immediate impact of curtailed supply and propane constraints was operational, with several units choosing to stop production from mid-March as costs rose. Fuel availability is central for ceramics because kilns need stable heat cycles, and interruptions can raise wastage and restart costs. The combination of limited supply and elevated LNG prices also tightened cost planning for units that rely on imported gas-linked pricing.

For GGL, the episode highlights exposure to global LNG volatility and the need to balance supply obligations with government directions. It also shows the operational challenge of keeping distribution running while sourcing incremental volumes in a high-price environment. The company’s stated approach was to source outside the Middle East and stay in continuous coordination with industry representatives to handle pricing and supply concerns.

Analysis: why the Morbi episode is closely watched

Morbi’s fuel mix shows why global disruptions can quickly create localised industrial stress. Before the disruption, a large part of daily fuel consumption was met through propane logistics, while a sizeable number of consumers used pipeline-supplied natural gas. When logistics-linked propane flows become uncertain and imported LNG availability tightens, both sides of the fuel stack get pressured.

The longer-term backdrop in the provided text also shows how fuel strategy and pricing can shift in response to Morbi’s demand cycles. Gujarat Gas has previously reduced industrial gas tariffs by ₹3.25 per SCM effective August 1, 2025, to stay competitive amid softening spot LNG and crude prices. Separately, brokerage commentary cited in the text flagged margin risks if natural gas is priced to achieve parity with propane in Morbi, with Nomura estimating negative margins of ₹0.8 to ₹1.4 per SCM on Morbi volumes over Q2 to Q4 FY25. These references show why the operational recovery in Morbi is relevant not only for factories, but also for gas distributors tracking volumes, sourcing costs, and pricing discipline.

Conclusion

Gujarat Gas said 142 ceramic units in Morbi are operational after joint efforts with the Morbi Ceramic Association to stabilise fuel supply amid global LNG volatility and supply disruptions in early 2026. The company said it sourced gas from international markets outside the Middle East and continued distribution in April under government norms, even as LNG prices stayed at $18-20 per MMBtu. Near-term operations will also be shaped by ongoing coordination between suppliers and manufacturers, and by regulatory provisions such as the GPCB’s three-month window for temporary fuel switching announced on March 5.