Asia IPA under downward pressure on lacklustre demand

SINGAPORE (ICIS)–Asia isopropanol (IPA) prices may come under downward pressure, after climbing for the last two months, as a result of weak regional demand but the downside will be limited because of tight supply, market sources said on Friday.

Demand is stable to soft in most of Asia except India, which is attracting more cargoes due to domestic production cuts in the prevailing drought, market sources said.

In the short run therefore, market participants feel the downward pressure on IPA prices to be limited.

IPA production has been cut in India, where water-rationing was implemented in the wake of the drought, compelling buyers to seek foreign cargoes.

A couple of Asia-based producers outside of India said they were focused solely on discussions with the India market, where they deemed it to offer the highest margins.

As such, the cargoes available for northeast (NE) Asia and southeast (SE) Asia were lower, according to several market sources.

“We are unable to get May shipments, and we are anxious to start discussions for June shipments,” said a southeast Asia-based trader.

Offers were noted higher at $840-850/tonne CFR (cost & freight) SE Asia this week, as compared with $830-850/tonne CFR SE Asia last week but many buyers said they could not accept the higher offers, given the slowdown in the feedstock acetone price uptrend.

Spot acetone prices on a CFR China basis were assessed as stable in the week ended 29 April, according to ICIS data. Prices were assessed flat at $620-640/tonne CFR China, after eight weeks of run-up.

Acetone supply is set to increase, with the start-up of two plants, in May. Should acetone prices weaken, IPA prices are most likely to be hit, according to the market players.

“Feedstock prices had been fluctuating and we hope IPA prices will fall soon. Hence, we are not actively seeking cargoes,” said a China-based buyer.

Meanwhile, the lacklustre demand in the downstream segments had kept some buyers from active procurement.

Major markets within the region were closed on 2 May for Labour Day, with individual countries in the region observing other holidays during the week.

The Japanese market was closed from 29 April to 5 May for a series of public holidays while the Korean market was closed on 4 May for Children’s Day.

Most southeast Asia-based buyers said they were largely stocked and were not anxious in seeking cargoes.

“There has been many public holidays in the region this week. We want to hold out until the markets return next week,” said another southeast Asia-based trader.

On 5 May, Indonesia and Malaysia observed the Muslim holiday of Isra & Mi’raj, while Thailand celebrated the Coronation Day of King Bhumibol Adulyadej.

Meanwhile, the supply remained tight with Shell Singapore still shut until July, according to market sources.

A northeast Asia-based producer was heard to have increased offers by $20/tonne to $820/tonne CFR China.

However, interest was muted as most market players preferred to wait-and-see.

However, some sellers remained upbeat given the seasonal pickup in demand in the summer and ahead of the Muslim fasting month of Ramadan, which starts in June this year.

IPA is mainly used in solvents, with outlets in cosmetics and personal care products, de-icers, paints and resins, pharmaceuticals, food, inks and adhesives.

It is also used in the extraction and purification of natural products, such as vegetable and animal oils and fats.

Other applications include its use as a cleaning and drying agent in the manufacture of electronic parts and metals, and as an aerosol solvent in medical and veterinary products.

Top image source: imageBROKER/REX/Shutterstock

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

Focus article by Angeline Soh