Oversupply and Lower Replacement Costs Pressure DMF Market

Chemical Price

• Importers have recently reduced the price of DMF by ₹3/kg, bringing it to ₹64++ per kg for Ex-Mumbai barrels and ₹62++ per kg for Ex-Mumbai ISO tanker loads.
• Bulk deals were recorded in the range of ₹60.00-61.00++ per kg on a 90-day LC basis for October lifting. Traders and brokers offered prices between ₹64.00-65.00++ per kg for intact barrels Ex-Hazira and Mumbai on 60 days' credit.
• Last month, DMF prices saw a notable 4% decline due to the arrival of vessels with a lower replacement cost at ports. Supply remained abundant in August and September, with a continuous influx of vessels, putting importers under pressure to liquidate stocks amid expectations of further price declines.

Chemical Demand and Supply

• The Indian demand for DMF is approximately 9,000 tonnes per month, which includes an average import of 7,000-7,500 tonnes, and domestic production by Balaji Amines, operating at an average capacity of 60%, producing around 1,500 tonnes per month. Key consumers of DMF include bulk drug, pesticide, adhesive, and synthetic leather manufacturers.
• Demand from the bulk drug and pesticide sectors has declined since the second half of August, resulting in bearish market sentiments. A surplus inventory at ports, combined with ample domestic supply, has led to intensified competition, as stated by a leading bulk buyer from the bulk drug industry.
• Future contracts for DMF are currently in backwardation, with October and November shipments priced lower than August contracts. Consequently, importers are refraining from immediate bookings in anticipation of further price corrections, according to a leading indenter.

Chemical News

• In the international market, the upstream crude oil benchmark, WTI, saw a 2.56% decrease to $66.43 per barrel, while feedstock CFR China methanol prices remained stable at $299 per tonne.
• Chinese DMF offers for the second half of October 2024 arrivals were quoted at $680-720 per tonne CFR India.

Expert Opinion

• Forecasts indicate that DMF prices will show volatility and a mixed trend this week due to surplus inventory at ports, cheaper replacement costs, and weak downstream demand. Buyers are advised to exercise caution in making bulk bookings, given the expectation of further price corrections.