Coronavirus causes ‘perfect storm’ for Europe IPA and ethanol demand

LONDON (ICIS)–Rising concern over the impact of coronavirus has weighed down on sentiment for much of the global manufacturing industry.

While logistics issues hang like a cloud over the whole sector, for some individual markets are seeing supply-demand fundamentals contorted specifically because of the need for some hygiene products.

While Synthomer announced in its 2019 results that it is yet to see increased margins on its nitrile rubber (NBR) products used in latex gloves, other petrochemical markets have already started to record higher prices on taught fundamentals.

There has been increased demand for the products that go into hand sanitisers, with spot prices for isopropanol (IPA) soaring in recent weeks.

One IPA source said: “IPA in Europe, the market is a bit hot… For the moment just wondering where the market is at this stage… Ranges are widening.”

The pressure felt in the IPA market is closely connected to supply or lack thereof of material that can be sold into the European market.

A styrene distributor said: “People in the distribution market are worried about other products. The pressure is on IPA, ethanol – which is extremely tight – disinfection liquids for hand sanitising…The question is to get to hold of physical molecules; then you can worry about pricing.”

The full impact of escalating demand may yet not be fully recognised, as concern of increasing infection rates could continue rising in the coming weeks, while another described IPA as being “torn out of our hands.”

Another trader speaking of IPA said: “It’s an exciting week …Trading companies are fighting for volume. They say hand sanitiser is an issue…If you have volumes, you’re the man. It’s been a perfect storm.”

There have been concerns about prices sky-rocketing which has led legislators in France to regulate the price of hydro-alcoholic gels, the country’s finance minister Bruno Le Maire announced on Wednesday.

Source: LegiFrance

In the UK, the Competition and Markets Authority (CMA) has warned retailers not to exploit consumers by hiking prices, as infection rates continue to increase on a daily basis.

Attitudes in Europe vary, and in Switzerland one source advised that they were not aware of any regulations that could cap prices, or that if there was such a policy it as not normally implemented.

Italy remains the worst affected country in Europe, with thousands in the country now infected and schools currently closed until at least 15 March in an effort to limit the spread of infection.

The increased concern in Italy has been evident in an uptick in demand for industrial ethanol, which is also used in hand sanitising products.

This has been reflected in Asian countries experiencing high levels of infection including Japan and South Korea, where buyers are unable to get ethanol as producers in the region typically focus on molasses-grade material.

The uptick in buying interest has been linked to demand in the personal care segment, as requests for deliveries are specifically for companies that make hand sanitisers.

Ethanol demand from other countries in Europe had not reacted in the same way, but one supplier anticipates this to change early next week, with some buyers speculating about the possibility of additional volumes later in March.

Front page picture source: Rungroj Yongrit/EPA-EFE/Shutterstock 

Focus article by Morgan Condon

Additional reporting by Anne-Sophie Briant-Vaghela, Fergus Jensen, Clare Pennington and Helena Strathearn

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