Acetone Prices Climb on Tight Supply; IPA Prices Ease

Key Highlights:

1. Price Trends: Acetone prices increased to ₹70/kg, while IPA prices declined slightly to ₹93/kg due to sufficient domestic inventory.
2. Supply & Demand: Recovering demand from bulk drugs and paints supports bullish trends for acetone and IPA through March 2025, despite prior weak downstream conditions.
3. Market News: Upstream crude oil and natural gas prices rose, influencing feedstock costs like benzene ($874/mt FOB Korea) and propylene ($810/mt FOB Korea).
4. Outlook: Seasonal demand from paints and coatings is expected to sustain upward price pressure. Buyers should manage inventories to counter potential price hikes.

Price Update: Acetone Climbs While IPA Sees Marginal Dip

• Importers have increased acetone prices by ₹2/kg, bringing the new price to ₹70/kg (Ex-Kandla) on 60-day credit terms. The price hike is attributed to reduced phenol production, as acetone is a byproduct of the cumene process. The resultant tight supply in the market has pushed acetone prices upward.
• In contrast, prices of isopropyl alcohol (IPA) have declined by ₹0.50/kg, now standing at ₹93/kg (Ex-Kandla) and ₹93.50/kg (Ex-Mumbai) on 60-day credit terms. This decrease is due to adequate inventory levels in the domestic market.

Supply & Demand Dynamics: Recovery in Paints and Bulk Drug Sectors

• In December, acetone and IPA prices witnessed corrections due to weak downstream demand. Bulk drug and paint production, key consumer sectors, slowed down amidst subdued market conditions.
• However, from mid-December onwards, demand for bulk drugs and paints began to recover and is expected to remain firm through March 2025.
• Acetone Demand: India's monthly acetone demand is estimated at 23-25 kt. Domestic manufacturers Deepak Phenolics and HOCL together contribute approximately 12 kt per month, with the remaining volumes being met through imports.
• IPA Demand: India's monthly IPA demand is around 21 kt. Domestic manufacturers Deepak Phenolics and Deepak Fertilizers produce about 10.8 kt per month, while 10-11 kt is imported to fulfill the balance.

Global Market Trends: Crude and Feedstock Prices on the Rise

• On the international front, upstream crude oil and natural gas prices have shown upward trends:
• WTI Crude Oil: Increased by 1.50% to $72.79/barrel.
• Natural Gas: Increased by 3.66% to $3.73/barrel.
• Key feedstock prices also reflect stability:
  FOB Korea Benzene: $874/mt.
  FOB Korea Propylene: $810/mt.
• Downstream product prices show the following levels:
  CFR China Acetone: $780/mt.
  IPA FOB Rotterdam: $1,125/mt.

Expert Opinion:  Proactive Planning for Seasonal Price Hikes

Market trends indicate bullish sentiment for both acetone and IPA prices as seasonal demand from the paints and coatings sector resumes alongside increased bulk drug production. Buyers are advised to plan their inventories proactively to mitigate potential price hikes.