Global Paracetamol Prices Experience Volatility Amid Geopolitical Tensions and Supply Chain Disruptions

In the ever-fluctuating landscape of pharmaceutical commodities, the month of December witnessed a noteworthy shift in the prices of Paracetamol across different regions of the world. Contrary to the anticipated projections by industry experts, major exporting and manufacturing countries experienced a significant decrease or stabilization in Paracetamol prices during this period. This unexpected trend of Paracetamol was attributed to geopolitical issues and a surge in freight charges, creating a complex and dynamic market environment.

In the Indian market, Paracetamol prices saw a substantial decrease, primarily driven by a decline in the prices of the raw material Para-aminophenol. The feedstock phenol prices also experienced a downturn, influencing the production cost and resulting in a weak and consolidated Paracetamol and Para-aminophenol market. The decrease in inquiries from downstream industries, coupled with the year-end destocking season, prompted manufacturers to maintain lower price levels. Limited cost support from upstream Benzene, amid a slowdown in procurement volumes from end-use industries, further contributed to the bearish market sentiments of Paracetamol.

The decline in crude oil prices also played a role in easing manufacturing costs for downstream petrochemicals, including Phenol. Despite OPEC+ agreeing to reduce output in early 2024, the market's reaction was subdued, indicating sluggish demand. Saudi Arabia's reduction in the official selling price for Asian markets and a lack of positive indicators in Asia's factory activity in November further added to the downward pressure on raw material prices and, subsequently, Paracetamol prices.

Conversely, Paracetamol prices in other regions, such as the USA and Europe, increased steadily due to heightened geopolitical tensions. The pharmaceutical exports from India, a major player in the global market, faced challenges stemming from tensions in the Red Sea and the Suez Canal. Potential issues included delays in deliveries including Paracetamol, changes in routes, contingency surcharges, increased freight costs, supply chain disruptions, and demand fluctuations.

The surge in Contingency Surcharge (CAC) in shipping lines presented an additional blow to Indian pharma exports, further complicating the global supply chain. The increased Paracetamol prices in the USA were closely linked to rising costs in exporting nations, creating a domino effect across production and transportation.

The missile attack on NUMBER 9, an OOCL-operated ship on December 3rd, and transit restrictions in the Panama Canal initiated on November 1st have intensified challenges in the global shipping network. These events, irrespective of their connection to Israel, have heightened threats to ships traversing the Red Sea. Container ships are now experiencing delays due to the reduced daily transit limit, set to decrease from 32 to 18 by February, adding strain to the already stretched global shipping network.