Europe IPA falls on competition from ethanol in hand-gel market

LONDON (ICIS)–The European isopropanol (IPA) market continued to slow from the high demand seen in March and April. There was even a degree of length seen this week on ample imports and increased competition from ethanol in the hand-gel market.

“There is relief on IPA demand coming from hand sanitiser manufacture as a number of customers  have jumped on ethanol to produce the gels,” said a trader.

This week, IPA technical grade was assessed at €2,200-€2,800/tonne FD NWE, down €300/tonne at the low end – its sharpest since prices peaked in April – and €200/tonne at the high end.

In the meantime, the average price for industrial grade ethanol, the grade used to make hand gels, was at €1,030-€1,070/tonne FD (free delivered) NWE (northwestern Europe).

The large downward move at the low end for IPA was because buyers were able to offer their views on where prices should be before sealing any deal.

Along with the lower prices, the same trader confirmed an improvement in availability of IPA for traditional applications.

One buyer of manufacturing softeners said, “I have two suppliers out of three coming to me this month telling me I have too much product, please can you take some.”

Last week the same was heard from a printing ink manufacturer.

The majority of sellers are seeing more molecules than previous weeks, although a few continued to see demand outstripping supply,  justifying prices closer to €3,000/tonne FD NWE.

However, sellers at those prices also conceded that the high end had slipped further, with fewer deals seen done at this level.

Several sellers readjusted offers their offers lower by several hundred euros per tonne in an attempt to stimulate demand that was clearly there but needed more convincing in order to materialise.

A greater number of sales took place around the €2,200/tonne FD NWE mark, and some sellers agreed to offload product at €2,100/tonne and buyers in the €2,000/tonne range.

Although there was downward pressure on technical grade IPA the same was not true for cosmetic and pharmaceutical grades where demand remained firm as they are difficult to import from elsewhere.

WAVE OF IMPORTS
Imports from northeast Asia were available for prompt delivery at €1,900/tonne FD NWE, with several deals confirmed at this level. Imports from China were also heard to be plentiful with March orders still arriving, but no new orders for product heard.

In March, 1,160 tonnes left China for the Netherlands – up from 105 tonnes for both January and February – according to a  China-based source. Belgium, Germany, Spain and the UK would have accounted for another 1,050 tonnes, suggesting a Europe-wide surge in imports.

One structural importer had some technical issues which limited its IPA production.

Prices for the pharma and cosmetic grades were unchanged again this week, boosted by stable demand and less competition from imports.

Sources say that the market can see the potential for demand to remain above pre-pandemic levels as new hygiene habits become the new norm, and as companies, schools, shops and public transport may be required to provide hand gels and other disinfectants.

In the near term, some sellers see a potential rebound in demand in Q3 as Europe recovers from lockdowns and restrictions to movement.

ASIAN PRODUCT DIVERTED TO  US
Higher prices were heard for exports to the US this week as traders who had imported product from Asia in March negotiated higher prices to North America where there is still a shortage of IPA-based hand gels.

“Demand from Canada and the US is very strong with new clients reaching out and willing to pay high prices,” said a Switzerland-based trader.

“IPA is the preferred raw material for hand gels in the US,” it added.

Prices for export from Europe were heard between $2,900-$3,500/tonne (€2,643-€3,190/tonne) CIF (costt, insurance & freight) total loading.

One European-based IPA trader of northeast Asian product was seeing a viable offer to its Canadian and US customers in the €2,500/tonne zone in the second half of May,

IPA is a solvent used in many industrial and consumer products and as an extractant. Applications include cosmetics, personal care products, de-icers, paints and resins, pharmaceuticals and inks and adhesives.