SE Asia IPA market bearish; demand weakens ahead of Ramadan

SINGAPORE (ICIS)–Southeast Asia’s isopropanol (IPA) market has been bearish amid weakness in downstream demand, ahead of the month-long Muslim fasting month of Ramadan.

Most countries in southeast Asia will be observing Ramadan starting 17 May – particularly Indonesia, which has a predominantly Muslim population – and this generally translates to a general slowdown in overall market activity.

IPA demand typically picks up in April and May, but has not improved as previously expected amid the monsoon season in Thailand and the recently concluded general elections in Malaysia.

In the week ended 11 May, IPA prices were assessed at $970-980/tonne CFR (cost & freight) SE (southeast) Asia, up $10/tonne at the low end of the previous week’s price range, according to ICIS data.

The high end of the assessed prices has not moved since 20 April, the data showed, although sellers have been raising their offers.

In April, IPA prices were stable to firm amid steady demand in southeast Asia.

In Thailand, “the rainy weather is affecting downstream demand”, a local trader said.

The monsoon season in Thailand typically lasts from May-July, hitting IPA demand from downstream paints and coatings sector, but consumption from the inks, printings and adhesives markets is expected to be stable.

With no improvement in demand, some traders were skipping end-May/early-June shipping cargoes altogether.

“Since demand is not that good, I won’t be getting any cargoes for May,” said a Singapore-based trader.

Malaysia had its general elections on 9 May, with the winning party declaring the two succeeding days as public holidays, consequently slowing down trading activities in the IPA market last week.

Demand is expected stable-to-soft from this week as downstream manufacturing will weaken because of Ramadan.

In Indonesia, demand for IPA has started to slow down ahead of the month-long Ramadan.

“Working hours would be shorter, so downstream demand will not be as good,” said an Indonesian trader.

Suppliers that sell to southeast Asia were lamenting narrower margins amid strong upstream acetone and propylene prices, while IPA prices were not rising as much.

“I have lowered my plant’s production rates because of [the] loss of profit margins,” said a northeast Asian producer, citing inability to procure acetone at cheaper prices.

Another producer in northeast Asia said: “I might as well wait and see for downstream demand to pick up.”

Focus article by Koh Yuanlin

Picture: Paints – downstream of isopropanol (IPA). (Photographer: Valentin Wolf/imageBROKER/REX/Shutterstock)