SRHHL Expands Sodium Methoxide (SMO) Production Capacity, Impacting Market Dynamics

Key Highlights

1. Price Trends: Sodium Methoxide prices rose by ₹2 per kg, with powder grade at ₹165++ ex-plant and solution at ₹65++ ex-Kurnool.
2. Market Supply: Robust supply is bolstered by new entrants like RR Innovative and capacity expansions by SRHHL.
3. Demand Distribution: India’s 22,000 metric ton annual demand is split across biodiesel (50%), chemicals (25%), and agrochemicals (25%).
4. Expert Outlook: Volatile prices are expected, with short-term stabilization likely due to rising supply and falling feedstock costs.

Price Trends: Sodium Methoxide Sees Upward Revision 

• In recent developments, domestic manufacturers have raised the prices of Sodium Methoxide by ₹2 per kg due to a surge in the cost of raw materials. The primary raw materials for Sodium Methoxide powder and solution (30%) are methanol and caustic soda flakes (CS flakes).
• Traders currently offer Sodium Methoxide (powder grade) of SRHHL made at ₹165++ ex-plant, while the 30% solution is priced at ₹65++ ex-Kurnool, Andhra Pradesh. 
• Allegro Specialty Chemicals Pvt. Ltd., a leading Sodium Methoxide manufacturer in South India, has also raised its rates, offering ₹166++ for powder grade and ₹66++ for the 30% solution ex-Athivaram, Andhra Pradesh, on advance payment terms.
• Week-on-week, Sodium Methoxide prices have increased by nearly 3%, driven primarily by rising raw material costs. While feedstock methanol showed a slight price correction this week, it has not impacted Sodium Methoxide (SMO) prices significantly.

Supply & Demand: Key Manufacturer Capacities in India

• The supply of Sodium Methoxide remains robust, with new market players like RR Innovative entering with additional capacity. Moreover, SRHHL has enhanced its Sodium Methoxide production capacity in March 2024, further altering the market landscape.
• However, conversion dynamics for manufacturers are currently negative, as the existing prices are below the cost of production. To produce 1 kg of Sodium Methoxide solution, approximately 0.75 kg of CS flakes and 0.60 kg of methanol are required, along with conversion costs.
• India’s annual demand for Sodium Methoxide is estimated at 22,000 metric tons, which 11 leading manufacturers meet. The downstream demand distribution is as follows:
  Chemical synthesis (intermediate): 25%
  Biodiesel production: 50%
  Agrochemicals and specialty chemicals: 25%
• Currently, buyers are opting for just-in-time procurement instead of long-term contracts, mainly due to surplus inventory and recent feedstock methanol price corrections.

Manufacturer Capacities

International Market News and Plant Updates

• In the international market, the WTI crude oil benchmark has seen a 0.54% increase, reaching $74.66 per barrel.
• Natural gas prices have risen by 4.53% to $3.60/MMBtu. 
• Conversely, the feedstock Asian benchmark CFR China prices have fallen by $3, and now stand at $307 per metric ton.
• Sree Rayalaseema Hi-Strength Hypo Ltd. (SRHHL), located in Kurnool, Andhra Pradesh, and part of the TGV group, has announced an expansion in its sodium methoxide production capacity. 
• Starting from March 27, 2024, the company will increase its production of sodium methoxide solution from 900 metric tons per month to 1,100 metric tons, and sodium methoxide powder from 150 metric tons to 300 metric tons per month.

Expert Opinion: Navigating Market Volatility

• Industry experts predict that Sodium Methoxide prices are likely to remain volatile this week due to a surge in downstream demand. However, with increasing supply and decreasing feedstock prices, the short-term outlook suggests some stabilization in SMO prices. 
• Buyers are advised to exercise caution and carefully evaluate contracts before committing, given the dynamic market conditions.