OUTLOOK ‘13: India solvents seen growing on IPA, acetone growth

27 December 2012 05:51  [Source: ICIS news]

By Veena Pathare

SINGAPORE (ICIS)--The solvent market in India is expected to see a growth of 6-8% in 2013, driven by growing isopropanol (IPA) and acetone markets, industry sources said.

New production capacities in Asia likely to commence operation in 2013 are expected to weigh on IPA and acetone prices in the two markets, industry sources said.

IPA demand in India is estimated to grow by 6-7% in 2013, according to a regional producer.

The primary demand driver is said to be the growth in the pharmaceutical industry, forecasted to gain at a healthy pace, according to the regional maker.

Pharmaceutical demand for the product accounts for about 75% of the total 100,000 tonnes/year of IPA demand in the country.

Domestic production contributes 70,000 tonnes of IPA and imports from northeast Asia, the US and Europe make up the rest.

Offers from US and European manufacturers are expected to be competitive, driven by sluggish domestic demand in these markets.

“Stable [IPA] supply and a lacklustre domestic demand in the US and Europe enable Indian importers to seek cargoes at competitive prices,” said a regional importer who regularly sources Asian as well as deep-sea cargoes into India.

“Additionally, an adequate-to-high inventory level in the domestic market through the first quarter of 2013 is likely to drive importers to purchase these cargoes over Asian lots,” the importer added.

A longer voyage time for these deep-sea cargoes is not likely to be a deterrent in early 2013, given the ample supply conditions in the domestic market.

According to ICIS data, production capacity for IPA is expected to go up by 30-40% across Asia.

With demand in Asia not expected to change in a big way, the additional product is likely to lead to a competitive pricing for the surplus product available for export to the Middle Eastern and south Asian countries.

The Indian acetone market is expected to grow at a healthy rate of 8%, fuelled by growth in downstream pharmaceutical and coatings markets, according to industry players.

Market participants expect acetone supply to outstrip demand, when the upcoming production facilities commence operation in 2013.

“Overcapacities in China, Taiwan and South Korea could lead to an excess supply of acetone, leading to more aggressive pricing,” believes a northeast Asian producer and a regular exporter of solvents to India and the Middle East.

Acetone offers that are presently at high levels because of high benzene prices are likely to soften when the upcoming facilities commence operation in 2013.

Offers were heard at $1,060.00-1,090.00/tonne (€805.60-828.40/tonne) CFR (cost & freight) India on 19 December.

According to the Indian government data, the total domestic installed capacity for acetone production is estimated at 68,700 tonnes/year, contributing to fulfil about 35% of total demand.

Imports from northeast Asia cater to the bulk of acetone demand, with over 160,000 tonnes of imported cargoes sourced in 2011.

($1 = €0.76)

By: Veena Pathare
+65 6780 4327

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