US IPA prices climb again on tightening supply and unprecedented demand

Author: Deniz Koray

2020/04/09

HOUSTON (ICIS)--US isopropanol (IPA) prices continued their unprecedented climb due to overwhelming demand for hand sanitizers during the coronavirus (Covid-19) outbreak. Prices in the US took off in mid-March and are continuing to rise amid increasing cases in multiple parts of the US.

IPA prices delivered (DEL) to the US Gulf are assessed at 70-210 cents/lb ($1543-4630/tonne), while export and spot prices are even higher.

ICIS Editorial Chart goes hereDOMESTIC IPA MARKETS

Isopropyl alcohol is used in many hand sanitizers, which were initially in high demand among consumers because of their ability to kill germs.

As the number of coronavirus cases in the US continues to increase, demand for IPA has soared in hospitals and other medical facilities, in order to keep doctors, nurses and technicians protected as they see contagious patients.

The US IPA market remains remains two-tiered.

IPA from major suppliers can be in the low 70 cent/lb range, while others are seeing prices 15-20 cents/lb higher than that. Some producers have instituted price increase initiatives recently, but they are generally not more than 5-10 cents/lb. In addition, some market participants have even seen producers remove or reduce proposed price increases.

However, supply is extremely tight in this segment, and buyers consist almost entirely of medical end users, traditional high-volume IPA buyers and a limited number of distributors.

The second tier contains multiple players in the secondary market, including distributors, traders and companies that have not traditionally dealt with much IPA. In this range, prices can start at $1.25/lb, if the delivery date is later in Q2, but can quickly rise above $2.00/lb for more immediate IPA.

FOB Gulf spot prices range from 100-270 cents/lb.

Prices above this range were heard and in some cases, confirmed. Some of the highest prices were not considered representative of the broader market.

OUTLOOK

Recently, reports of imports from South Korea and Taiwan have increased, especially due to the domestic shortage. China is also ramping up production. Due to the rising prices and extremely tight supply, market participants are more receptive to dealing with Chinese imports than in the past.

Conversely, exports to Europe have begun to decline because of rising domestic prices, as well as high numbers of hospitalisations in different parts of the US.

Last week, the US had more than double the confirmed coronavirus cases of Italy or Spain, the two hardest-hit countries in western Europe.  Now, the US has more than triple the number of confirmed cases of either country. The US still has fewer cases per capita than Italy, Spain or France, as well as lower death rates, however.

Earlier this week, the Institute for Health Metrics and Evaluation (IHME) revised some state and national models, and it is now predicting fewer total deaths by the end of the summer than they had last week. This may have contributed to a slowdown in activity in markets for IPA arriving in June.

US IPA suppliers include ExxonMobil, Dow Chemical, LyondellBasell, Monument Chemical and Shell Chemical.

Focus article by Deniz Koray

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