Oversupply of Acetone Based Isopropyl Alcohol in Global Markets

Isopropyl Alcohol (IPA) is experiencing an oversupply situation in the global markets, the supply is particularly high in the Asian markets with the imports rising exponentially in countries including India which has also initiated anti-dumping duty probe against several Asian countries for surge in IPA imports.

IPA is produced via two methods which include the Acetone route and the Propylene route. The demand of Phenol has been increasing for the past couple of months due to the reviving construction sector globally. As Acetone is obtained as a by product during the production of Phenol, the supply of Acetone also increased in the market which has caused the prices of Acetone to fall sharply for the last couple of months.

The lower prices for Acetone has given a boost to the Acetone based IPA production and countries which have more Propylene based IPA production domestically have been facing reduced margins for IPA producers. In this regard India has initiated anti-dumping duty probe against the IPA imports from several countries as there has been an 86% rise in the imports of IPA which mostly Acetone based.

IPA is a clear, colourless liquid having an alcoholic odour. It is soluble in water, Ethyl Alcohol and undergoes reaction with strong oxidants. It is a low cost solvent used in several industrial and consumer products as an extractant. Major end use industries for IPA include cosmetics and personal care, paints and resins, pharmaceuticals, and adhesives. The global demand for IPA stood at around 2.98 million tonnes in 2020 and is expected to grow at a CAGR of 5% in the upcoming years.

As per ChemAnalyst, “the oversupply of Acetone based IPA in the global markets will surely affect the margins of companies producing IPA via Propylene route as the prices of Acetone are falling globally. The demand for IPA is on the rise due to the application in hand sanitizers in the wake of the coronavirus pandemic.