Asia IPA nears six-month low on weak demand, low feedstock price

25 June 2012 07:20  [Source: ICIS news]

Asia IPA near 6-month low on weak demandSINGAPORE (ICIS)--Asia’s isopropanol (IPA) prices fell to the lowest level in nearly six months amid persistently low demand in the key Chinese market and weak feedstock acetone and propylene prices, market sources said on Monday.

Prices of spot cargoes were at $1,150-1,170/tonne (€920-936/tonne) CFR (cost and freight) northeast (NE) Asia on 22 June, down $10/tonne from the previous week and back to levels last seen in the second half of December 2011, according to ICIS data.

Several distributors in China said they have suspended imports since March as the downstream demand did not improve after the Lunar New Year holidays in the second half of January.  

“These days, we hardly get any buying enquiries from China. Those who contact us are only checking prices most of the time,” a northeast Asian producer said.

Some producers outside China also struggled to compete with Chinese suppliers who are able to price their cargoes at lower prices as most of them are using acetone, which is a lower-cost feedstock compared to propylene.

“Import cargoes are too expensive compared to domestic supplies. We have switched to trading domestic product for some months now,” said a Chinese trader.

The recent declines in acetone and propylene prices also dampened buying sentiment, industry players said.

Reflecting the dismal market conditions, IPA imports have been on a steady decline since March.

Imports fell from around 14,570 tonnes in February to less than 6,400 tonnes in March and 4,783 tonnes in April, according to China’s official trade statistics.

The demand outlook remains bearish in the next few months, given the slowdown in the Chinese economy and the abundant availability of cheaper domestic material, industry players said.

“Some of us have already cut down on our IPA business and we are focusing on other more lucrative products,” a Chinese trader said.

($1 = €0.80)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Yeow Pei Lin

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