Updated to mid-August 2011
Asian market review by Pei Lin Yeow, ICIS pricing
Asian isopropanol (IPA) prices settled at $1,350– 1,400/tonne CFR (cost & freight) SE Asia (southeast Asia) in mid-August, down by $200– 210/tonne CFR SE Asia from mid-May amid ample supply and weak demand.
Regional producers cut their offers for June and July shipments to southeast Asia, as most of their distributors had higher inventories because of earlier strong imports from northeast Asia.
The supply glut also resulted from persistently weak Chinese import demand on increased domestic production. Faced with added pressure from higher feedstock propylene and acetone costs, several producers in northeast Asia were forced to reduce their IPA production since June, either by cutting their plant run rates or shutting their facilities temporarily for maintenance.
The decline in IPA supply from northeast Asia is expected to help support regional prices in the short-term, participants said.
European market review by Mark Victory, ICIS pricing
European isopropanol (IPA) prices have fallen by €160-180/tonne during the period from mid-May to mid-August, amid weak demand.
Consumption has been weakened by declining macroeconomic conditions, which have limited buying interest in the downstream construction sector, an area heavily linked to GDP.
A stock market slump in the beginning of August made traders cautious. Their main concerns were about the impact on exchange rates, which will affect import/export levels, as well as the effect on GDP.
Players said it was too early to comment on the impact of declining stock markets on economic conditions, because share prices are currently being driven by speculation, and the true level of decrease will not be seen until stock markets stabilise. In addition, it will take at least three months before the effects of the stock market crash work through the chemical chain and are seen in downstream markets, sources said.
US market review by Larry Terry, ICIS pricing
US isopropanol (IPA) domestic contract prices gained 10 cents/lb ($220/tonne) early in the three-month period leading up to mid-August 2011, but eventually gave up 17–18 cents/lb on softer demand and weaker upstream values.
Feedstock chemical-grade propylene prices increased by 9.5
cents/lb in May, but then dropped by 15 cents/lb in June and
gave up another 4 cents/lb in July.
IPA contract prices increased to $1.12–1.15/lb at the start of the period, but dropped to 95–97 cents in July, with ongoing pressure on producers to lower contract prices again in August.
With barge traffic still curtailed in May because of high water along the flooded Mississippi River, demand for trucks and railcars heightened, and supply constraints forced some buyers to limit downstream volumes to historical levels.
But, although IPA demand ended the period higher than one year ago, it was unexpectedly lower during the delayed US spring coatings season because supply was more available.