US IPA prices decrease on lower demand; supply remains ample

HOUSTON (ICIS)–Despite some optimism that demand would improve in mid-August, isopropanol (IPA) markets have seen diminished demand this week. Prices fell in domestic, export, and spot markets.

Domestic prices fell by 5 cents/lb ($110/tonne) on the high end and 7 cents/lb ($154/tonne) on the low end. Prices are now assessed at 58-70 cents/lb DEL US Gulf.

Players reported activity in spot markets was down this week, as buyers said they had ample inventories at the moment. Spot prices decreased 3-5 cents/lb and are now 60-68 cents/lb FOB US Gulf.

In some cases, buyers were willing to buy additional IPA since they had storage capacity. However, they found themselves in better-than-expected bargaining positions since there were multiple suppliers offering product for sale.

The price chart below shows domestic, spot, and export pricing over the past 12 months.

Hurricane Impacts Expected to be Minimal

Hurricane Laura made landfall close to the Louisiana/Texas border in the early hours of 27 August. The most dangerous impacts of the hurricane were felt in southwest Louisiana. Certain areas of southeast Texas were also impacted.

Some IPA facilities appeared unscathed due to their locations. For example, a representative for LyondellBasell said that the company’s facility in Channelview, Texas, was not shut down.

ExxonMobil’s facility in Baton Rouge, Louisiana, was even farther away from Hurricane Laura’s path, and production continued there.

Supply is not expected to tighten in the hurricane’s aftermath.

Coronavirus’s Diminishing Impact on Demand

The surge seen in IPA following the initial wave of coronavirus cases in February and March has not recurred, which surprised various players at points throughout the summer.

Coronavirus cases have fallen in recent weeks in the US, including in states that were hit hard in the second wave such as California, Florida, Arizona and Texas.

However, there has been a resurgence of cases in the Midwest.

Some market participants had expected an increase in demand for sanitary chemicals as universities and schools opened throughout the US in August, but a stark increase in demand has not been observed thus far.

In export markets, one player noted that exports from China were facing upward price pressure due to higher feedstock costs, and as a result, this could increase the demand for US exports to Latin America in the near-term.

Exports to Latin America had diminished as US suppliers could not compete with much lower Chinese prices in the summer.

Export prices are assessed at 58-68 cents/lb FOB US Gulf Export.

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

Click here to view the US Gulf storms – impacts on chemicals topic page.

Focus article by Deniz Koray