HOUSTON (ICIS)--Isopropanol (IPA) domestic and spot prices fell this week due to lengthening supply.
Several market players stated that IPA inventories increased this week, in sharp contract to the spring, when buyers were struggling to obtain IPA at much higher prices.
IPA prices rose due to high demand and unprecedented tightness in supply in March and April, but the market has readjusted by Q3. Sales controls have been removed, and several producers have had unexpected inventories.
One player heard that several producers were considering closing down their IPA production. These were not traditional IPA producers with large production capacity, but newer, smaller producers that began making IPA in order to meet the market's strong demand in March and April.
Domestic prices this week fell 10 cents/lb on the low end, and 20 cents/lb on the high end. Prices are now assessed at 70-80 cents/lb ($1543-1764/tonne) delivered (DEL) US Gulf.
Spot prices also fell this week, and are now assessed at 68-76 cents/lb ($1499-1676/tonne) FOB US Gulf.
There has yet to be a second spike in prices, following an increase in coronavirus cases and hospitalisations beginning in mid-June.
The chart below shows domestic and spot IPA prices as of 6 August.
Rising Propylene Costs
IPA could face some upstream pressure following last week's propylene contract settlement. Propylene contracts settled up 6 cents/lb ($132/tonne) on 31 July, the largest month-on-month increase since June 2018. This marks a departure from much of the past year, when propylene contracts often settled down.
Market participants said demand was still healthy at the lower prices, and buyers purchased available product by the middle of the week.
There was optimism that the lower IPA prices would boost demand from buyers, who had switched to ethanol for budgetary reasons.
Particularly for end users in the hand sanitizer business, IPA could be preferable, due to its more neutral odour.
US IPA suppliers include ExxonMobil, Dow Chemical, LyondellBasell, Monument Chemical and Shell Chemical.
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