Indian Sodium Methoxide Market Sees Price Correction Amid Biodiesel Slowdown

Key Highlights

1. Price Decrease: Sodium Methoxide prices have dropped by ₹1/kg, with powder grade at ₹149++ and 30% solution at ₹62++ ex-Kurnool.
2. Supply Stability: New capacity expansions by companies like SRHHL are reshaping the Sodium Methoxide market, despite unfavorable production costs.
3. Demand Distribution: India's Sodium Methoxide demand is driven by biodiesel production (50%), chemical synthesis (25%), and agrochemicals (25%).
4. Expert Insights: Prices may remain mixed this week; buyers should evaluate contracts carefully in a fluctuating market.

Price Analysis: Current Trends in Sodium Methoxide Pricing

• Domestic manufacturers have reduced Sodium Methoxide prices by ₹1 per kg due to a slowdown in biodiesel production and the fiscal year-end market lull. The key raw materials for Sodium Methoxide powder and its 30% solution are methanol and caustic soda flakes (CS flakes).
• Currently, traders are offering Sodium Methoxide (powder grade) from SRHHL at ₹149++ per kg ex-plant, while the 30% solution is priced at ₹62++ ex-Kurnool, Andhra Pradesh. 
• Allegro Specialty Chemicals Pvt. Ltd., a major manufacturer in South India, has revised its pricing, quoting ₹148-150++ per kg for powder grade and ₹65++ per kg for the 30% solution, Ex-Athivaram, Andhra Pradesh, with advance payment terms.
• On a weekly basis, Sodium Methoxide prices have declined by approximately 0.5%, largely influenced by falling methanol costs. 
• Over the past two weeks, feedstock methanol prices have dropped significantly by nearly ₹6 per kg, directly impacting Sodium Methoxide pricing.

Supply & Demand Overview: Stability Amid Market Adjustments

• The supply of Sodium Methoxide remains stable, with new entrants like RR Innovatives expanding market capacity. Additionally, SRHHL increased its production capacity in March 2024, further reshaping the market landscape.
• However, manufacturers are facing unfavorable conversion economics, as current market prices are below production costs. The production of 1 kg of Sodium Methoxide solution requires approximately 0.75 kg of CS flakes and 0.60 kg of methanol, along with associated conversion costs.
• India's annual Sodium Methoxide demand stands at 22,000 metric tons, met by 11 major manufacturers. The downstream demand distribution is as follows:
  1. Chemical synthesis (Pharma intermediates): 25%
  2. Biodiesel production: 50%
  3. Agrochemicals & specialty chemicals: 25%
• Currently, buyers are adopting a just-in-time procurement approach rather than engaging in long-term contracts, primarily due to high inventory levels and recent methanol price corrections.
• Manufacturer Capacities: Key Players in the Sodium Methoxide Market
  as per the Powder Capacity (MT/Month)-
  1. SRHHL- 300
  2. Allegro Specialty Chemicals - 200
  3. Chem Tech Acid - 200
  4. Surabhi Industries - 500
  5. RR Innovatives - 100
  6. Alkali Metals - 80
  7. Vital Alkoxides Pvt. Ltd. - 100
  8. Shakti Distilleries - 80
  9. Emco Dyestuff Pvt. Ltd. - 80
  10. Meru Chem Pvt. Ltd. - 100
  11. Supra Combine - 80

International Market Update: External Factors Influencing Prices

• In the global market, WTI crude oil prices have increased by 0.54% to $74.66 per barrel, while natural gas prices have surged by 4.53% to $3.60/MMBtu. 
• Meanwhile, feedstock methanol prices in the Asian market (CFR China) have dropped by $3, now standing at $307 per metric ton.
• Sree Rayalaseema Hi-Strength Hypo Ltd. (SRHHL), part of the TGV Group and based in Kurnool, Andhra Pradesh, has announced an expansion of its Sodium Methoxide production capacity. 
• Effective March 27, 2024, the company will increase its monthly production capacity for Sodium Methoxide solution from 900 metric tons to 1,100 metric tons, and for Sodium Methoxide powder from 150 metric tons to 300 metric tons.

Expert Opinion: Navigating Market Fluctuations and Pricing Dynamics

• Industry experts anticipate that Sodium Methoxide prices will remain mixed this week due to weak market fundamentals and declining feedstock costs. 
• Buyers are advised to proceed cautiously and thoroughly assess contracts before making commitments, given the dynamic market conditions