Indian IPA Market Sees Price Dip Despite Anti-Dumping Duty Implementation

Key Takeaways:

• IPA prices are declining despite Anti-Dumping Duty due to weak demand and favorable replacement costs for importers.
• Domestic IPA prices dropped 8% month-on-month, attributed to excess inventory and subdued market sentiment.
• Domestic producers and importers are hesitant to sell at lower bulk-buying rates. International crude oil prices dropped by 2.45%, while natural gas prices increased by 1.36%.

Chemical Price: IPA Prices Fall Amid Competitive Import Costs

• Despite the implementation of Anti-Dumping Duty (ADD), isopropyl alcohol (IPA) prices have been on a downward trend. Importers have been offering highly competitive prices compared to domestic manufacturers, as replacement costs are currently more favorable. As a result, importers are actively pushing for liquidation to clear their inventories.
• Currently, IPA prices stand at ₹95++ per kg ex-Kandla and ₹96++ per kg ex-Mumbai on a 60-day credit basis. Bulk buying interest is observed in the range of ₹91-92++ per kg on a 90-day credit term. However, both importers and domestic manufacturers are unwilling to sell at these lower levels, according to a major bulk purchaser.
• On a month-on-month basis, domestic IPA prices have dropped by nearly 8%, while week-on-week prices have seen a 4% decline. The price reduction is attributed to weak market sentiment, lower replacement costs, and an excess of inventory at the ports.

Chemicals Demand and Supply: October Add Impact and Market Adjustment

• Supply levels remain robust from both domestic producers and importers. In October 2024, domestic IPA prices saw a spike following the announcement of Anti-Dumping Duty by the Directorate General of Foreign Trade (DGFT) on several Chinese exporters, set at $217/tonne. However, this increase was short-lived as importers quickly adjusted to the ADD, finding ways to lower replacement costs and stay competitive even with the duty in place.
• The swift response from importers led to a price correction. Additionally, Deepak Phenolics, a key domestic producer, completed its short annual turnaround and resumed operations on 27th October 2024, further boosting domestic supply.
• Meanwhile, the downstream bulk drug production, which had reduced in October 2024, continues to operate at lower production rates due to subdued demand. The monthly demand for IPA in India stands at approximately 21,000 tonnes. Domestic manufacturers like Deepak Phenolics and Deepak Fertilizers together contribute about 10,800 tonnes per month, while imports supplement the market with an additional 10,000-11,000 tonnes.

Chemical News: Global Crude and Feedstock Price Movements

• In the international market, upstream crude oil prices (WTI benchmark) declined by 2.45%, settling at $67.02 per barrel. On the other hand, natural gas prices saw a slight increase of 1.36%, reaching $2.82 per MMBtu.
• Feedstock FOB Korea Benzene prices dropped by $5 to $860 per tonne, while FOB Korea Propylene prices remained stable at $805 per tonne. Downstream, CFR China IPA prices were reported at $770 per tonne.
• IRPC, a major polypropylene manufacturer based in Thailand, resumed operations this week after a shutdown in the second half of October 2024. The plant has an annual production capacity of 192,500 tonnes of polypropylene, which is expected to impact the regional supply dynamics.

Expert Opinion: Strategic Purchasing in a Bearish Market

• IPA prices are expected to remain under pressure this week due to weak demand, an increase in supply, and lower replacement costs. Buyers are advised to adopt a 'just-in-time' purchasing approach instead of building up inventories, given the current bearish outlook.