MDC Prices Under Pressure as US Pharma Tariffs Disrupt Demand Patterns

Key Highlights

• Feedstock Costs: Methanol prices remain volatile, pressured by oversupply in China and sanctions on Iranian-origin cargoes.
• Supply & Demand: Downstream pharma demand muted, while domestic MDC production stays stable.
• Global Energy Impact: Crude oil prices fell on Kurdistan supply resumption; natural gas and acetic acid trends diverged.
• Market Outlook: Prices expected to remain mixed in the near term; sanctions and weak pharma demand may drive further volatility.

MDC Prices: Domestic Prices Down

• Domestic manufacturers reduced methylene dichloride (MDC) prices by ₹1–2/kg this week. Authorized dealers are offering tanker load prices at ₹31.00–31.50++ per kg, Ex-Gujarat, on 60-day payment terms.
• In the international market, Asian benchmark methanol spot prices strengthened earlier in September, but later corrected:
  a. 2 Sep,2025 : $272/mt
  b. 8 Sep,2025 : $276/mt
  c. 12 Sep,2025 : $282/mt
  d. 21 Sep,2025 : $283/mt
  e. 29 Sep,2025 : $277/mt
• Feedstock methanol prices in China dropped to 2,250 CNY/tonne on 22 September, reflecting oversupply pressures and weaker downstream demand. Rising inventories, coupled with active selling to liquidate stocks, reinforced the bearish sentiment.
• Methanol availability in Asia has tightened following US sanctions on Iranian methanol importers. Iran-origin cargoes had dominated India’s methanol imports in May–June 2025, contributing nearly 80% of total inflows. However, buyers are now avoiding Iranian-origin material due to sanction risks.
• The sharp increase in methanol costs has put pressure on downstream producers such as MDC and sodium methoxide manufacturers, raising conversion costs. Still, MDC supply remains steady in southern India, with Sreyas, TGV SRAAC, and Chemplast operating at full capacity.

Demand–Supply Balance: Steady Output Meets Sluggish Consumption

• Downstream consumption of MDC has declined significantly as pharmaceutical producers cut back operations amid volatility and uncertainty arising from ongoing US tariffs on pharmaceuticals. This has led to surplus stock availability in the domestic market.
• Importers, indenters, and bulk buyers continue to avoid Iranian-origin methanol, and this shift is expected to tighten supply in the coming months. Domestic manufacturers, however, continue to face stiff competition, given weak demand across end-use sectors.
• India’s monthly domestic MDC consumption is estimated at around 30,000 metric tons, with key applications spanning bulk drugs, paints, metalworking, and polyurethane foams. Although demand was initially expected to grow at a steady pace, the sharp decline in pharma activity is likely to weigh on short-term consumption.

Domestic production capacities (MT/day):

Global Energy Influence: Crude Weakness Shapes MDC Outlook

• Global energy markets remain volatile. WTI crude oil futures fell more than 3% to $63.6/bbl after Iraq’s Kurdistan region resumed crude oil exports following a two-and-a-half-year halt.
• This move, backed by US pressure, is expected to gradually restore exports to around 230,000 bpd. The return of Kurdish volumes coincides with OPEC+ efforts to raise supply and expand market share.

Other key markers:

1. WTI crude: ↓2.42% to $63.33/bbl
2. Natural gas: ↑0.04% to $3.25/MMBtu
3. CFR China methanol: ↓$10 to $276/mt
4. FOB China acetic acid: steady rise to $306/mt

Expert Opinion and Market Outlook

• Market participants expect MDC prices to remain mixed in the near term as supply balances against weaker downstream demand. 
• Feedstock volatility, especially methanol’s sensitivity to global sanctions and oversupply, will continue to shape cost dynamics. 
• Over the longer horizon, the recently imposed US sanctions on pharmaceuticals may add to uncertainty, potentially triggering price wars among domestic manufacturers. 
• Buyers are advised to adopt a cautious stance while locking in bulk contracts under prevailing bearish sentiment.