FocusIndia IPA import market to stay subdued on high inventory

31 January 2013 03:33  [Source: ICIS news]

By Veena Pathare

IPA is used in the pharmaceutical and agrochemical sectors, as well as a solvent in the coatings industry.SINGAPORE (ICIS)--India’s isopropanol (IPA) market is likely to remain quiet in the next two months as the country's current high inventory of the material is more than sufficient to cover its import requirement through end-March, industry sources said on Thursday.

Deep-sea cargoes arriving at the Indian ports in the next three to four weeks will further boost available supply in the domestic market, they said.

Trading in the import market will be subdued, with price movement expected to be limited in the near term, market sources said.

On 30 January, spot IPA prices were assessed at $1,320-1,350/tonne (€977-999/tonne) CFR (cost on freight) India , up by $5/tonne at the high end of the range from the previous week, according to ICIS.

A 1,000-tonne Singapore cargo for delivery in the second half of February was concluded during the week at $1,350/tonne CFR India.

IPA prices in India have remained largely unchanged over the past three weeks, according to ICIS data, given ample availability of the product in the domestic market.

“It is difficult to consider any Asian offer above $1,350/tonne India, as a bulk of the European and US cargoes that arrived in January and those expected in February were booked at $1,320-1,350/tonne CFR India levels,” a key importer said.

About 4,000 tonnes of US and European material booked in November and December 2012 are expected to reach the Indian shores in February – higher than the country’s usual monthly import volume of 2,500-3,000 tonnes, market sources said.

Current inventory of the material at ports are also higher than usual, following the arrival of some 3,000-3,500 tonnes of imported cargoes in January, they said.

At Kandla on the west coast, IPA stocks were at 4,000 tonnes, while about 2,900 tonnes of inventory have built up at Vishakhapatnam, Kakinada and Ennore ports on the east coast, market sources said.

India is a major importer of IPA in Asia, procuring about a third of its 100,000 tonne/year consumption from northeast and southeast Asia.

Early this week, IPA bids were heard at $1,270-1,280/tonne FOB (free on board) NE (northeast) Asia, which is equivalent to $1,340-1,350/tonne CFR India, market sources said.

A northeast Asian IPA producer, however, has misgivings about accepting bids at current levels on expectations that cost of feedstock propylene will increase next month.

“Propylene in the US and European markets are high, and Asian prices are showing signs of firming. So it is very difficult to consider offering at $30-40/tonne below the targeted selling idea,” a source from the producer said.

January and February propylene contracts in Europe and the US were settled at higher prices because of limited supply.

For February IPA lots, the northeast Asian producer’s selling ideas and offers were at $1,310-1,330/tonne FOB NE Asia, or $1,380-1,400/tonne CFR India, and its offers for March-loading cargoes could well increase because of high propylene costs.

Propylene prices in northeast Asia were at $1,320-1,350/tonne CFR NE Asia on 30 January, netting an increase of $10/tonne at the high end of the range from Tuesday.

Rising feedstock prices could provide firm support to IPA prices in Asia, despite softer demand from China in the weeks leading to the week-long Lunar New Year holidays, market sources said.

The Chinese market will be on holiday on 9-15 February.

Some northeast Asian IPA producers using acetone as feedstock were heard to be contemplating selling acetone cargoes, rather than IPA, in order to realise better margins, according to market participants, although this could not be confirmed with the producers.

Other northeast Asian IPA producers, meanwhile, have reduced operating rates to less than 50% of capacity because of negative margins.

IPA is used in the pharmaceutical and agrochemical sectors, as well as a solvent in the coatings industry.

($1 = €0.74)

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

By: Veena Pathare
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