Weak Consumer Sentiments in China and India to Extend the Bearish Run in Isopropyl Alcohol Prices

As China is amongst the major producers of Isopropyl Alcohol (IPA) in the regional market, dullness in IPA consumption in November-December has turned its prices relatively weak. Exports from China have gradually shrunken in the past few weeks following the international dullness in the demand pattern with onset of the holiday season. Whereas in India, prices of IPA have plunged to 4-weeks low on bleak purchasing activities post the festive season in addition to the consistent fall in Acetone prices since early November.

It was observed that the dual energy policy in China relatively reduced the overall chemical output for November. On the other hand, due to bearish demand pattern several companies based in China were heard further inducing a cut on their operating rates by nearly 20% in December. However, even after these adaptations, the oversupply situation for various petrochemicals has remained persistent in the regional market.

As China adheres more than 1500 KTPA Isopropyl Alcohol capacity, its monthly output has flooded the regional market with ample supply at times of the overall dullness in its offtakes. Lihua Yiweiyuan, one of the leading players of IPA in China has recently resumed its production which has further lengthened the oversupply situation. Since the supply has exceeded drastically in comparison to the overall demand, traders were left with no other option than to allow consistent negotiations to manage their inventory levels.

As per ChemAnalyst, “India has been witnessing a staggering low point in its overall petrochemical demand since mid-November. As IPA is considered as a relatively expensive solvent, other cost friendly alternatives have been preferred by manufacturers to safeguard their margins. Looking at the positive side, consistent drop in its prices is likely to re-captivate the interest of downstream buyers that earlier sidelined due to the extensive margin pressure. However, market uncertainty and the extended oversupply situation from China is likely to keep IPA prices low in the whole of December.”