US IPA demand sees first signs of softening since coronavirus pandemic start

HOUSTON (ICIS)–For the first time since the start of the coronavirus (Covid-19) pandemic in Western Europe and North America in early March, some market participants said this week’s isopropanol (IPA) market showed signs of softness.

While demand had slowed in the past month, it is still considered much stronger than before the pandemic. However, this week some players said there was ample supply of IPA, as buyers showed more restraint when making purchases or sought cheaper Asian imports.

Others said that IPA was still moving at a steady pace, even if the demand was not comparable to levels seen in late March and early April.

IPA PRICING

IPA prices continued to fall, especially on the high end, in domestic and spot markets. This continues pricing trends seen in the past month.

While prices remain much higher than they were before the coronavirus outbreak, the top prices in the market have fallen considerably. In addition, the range of prices has narrowed.  Until this week, the lower end of prices had not decreased much.  In fact, there had actually been several successful separate price increases from producers.

However, lower prices were heard this week.  Domestic prices are assessed at 95-120 cents/lb ($2094-2646/tonne) delivered (DEL) to the US Gulf.  Prices fell 10 cents/lb on the low end and 20 cents/lb on the high end.

In spot markets the price range is 100-125 cents/lb FOB US Gulf.  This marks a 10 cent/lb reduction on the lower end and a 25 cent/lb decrease on the higher end of prices.

OUTLOOK

Increased domestic production of IPA and a rise in exports from Taiwan, South Korea and China have contributed to the decline in prices.

Since IPA is used in hand sanitizers and disinfectants, demand has been very high on those fronts since March, although it has begun to cool. A market player said buyers were becoming more patient when seeking IPA, especially since it is more plentiful as of late.

On the other hand, other uses for IPA saw reduced demand, especially for use in the oil and gas industry.

However, a resurgence of coronavirus cases in US states that did not have particularly strong first waves could lead to an increase in IPA demand.

As many parts of the US have reopened in the past month, the number of cases in some southern and southwestern states – including Texas, Arkansas, and especially Arizona – have steadily increased.

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

Visit the ICIS coronavirus topic page for analysis of the impact on chemical markets and links to latest news.

Focus article by Deniz Koray