MDC Prices See Decline Amid Ample Supply and Surging Competition
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MDC prices have dropped by ₹2/kg due to slowing demand and high inventories. Intense competition among domestic manufacturers, particularly with new entrant Sreyas Industries, has further pressured prices. India’s MDC consumption is steady, though a demand recovery is anticipated in FY 2024-25. Mixed price trends are expected, with high production costs and potential price volatility.
Key Takeaways:
- Domestic MDC prices decreased by ₹2/kg due to reduced demand and excess supply.
- New entrant Sreyas Industries is intensifying competition, particularly in the East and South.
- India's MDC consumption is around 30,000 MT per month, with growth expected in FY 2024-25.
- High feedstock costs may maintain production expenses, with anticipated price volatility among domestic suppliers.
Chemical Price
- Domestic manufacturers have decreased MDC prices by ₹2/kg today. Authorized dealers are now offering MDC tanker load prices at ₹38++ per kg, Ex-GFL. In the South, TGV SRAAC's authorized dealers are quoting lower prices at ₹36++ per kg, Ex-Kurnool, for advance payment on bulk deals.
- This price reduction is attributed to a slowdown in bulk drug demand and excess inventory levels among manufacturers. Additionally, the recent resumption of operations by new entrant Sreyas Industries on the East Coast has intensified competition, closing the arbitrage opportunity for Western manufacturers in Eastern and Southern regions.
Chemical Demand and Supply
MDC supply remains ample, with domestic manufacturers engaged in intense competition as demand weakens. India’s domestic consumption of MDC is estimated at approximately 30,000 metric tons per month. Key downstream consumers include bulk drug producers, paint, metalworking, and polyurethane foam manufacturers. Although initially projected to grow moderately, MDC demand is now expected to experience robust recovery in FY 2024-25, as per insights from a leading MDC manufacturer.
- Current production capacities of key manufacturers are as follows:
- Grasim: 100 MT/day
- GACL: 250 MT/day
- GFL: 150 MT/day
- TGV SRAAC: 200 MT/day
- Sanmar: 50 MT/day
- Meghmani: 80 MT/day
- SRF: 350 MT/day
- Sreyas: 160 MT/day
Chemical News
- In global energy markets, the WTI crude oil benchmark has decreased by 1.27%, now priced at $71.07 per barrel. Meanwhile, natural gas prices have seen a slight uptick, rising by 0.12% to $2.67 per MMBtu.
- China's Quinghai Zhonghao, a leading methanol producer located in Golmud, announced a plant shutdown in late October. The plant has a production capacity of 600 kt per annum.
Expert Opinion
- Mixed trends are expected in MDC prices in the near term as the market adjusts supply levels. High feedstock costs are likely to keep MDC production expenses elevated. In the longer run, the entry of Sreyas Industries could increase price volatility and spark potential price wars among domestic suppliers. Buyers are advised to proceed cautiously with bulk contracts in light of these dynamics.
Daily Market Report
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