Price competition pulls down Ex- work price of Phthalic Anhydride in India – 26 May 2014

The price of Phthalic Anhydride (PA) has declined considerably against the price of the feedstock, Orthoxylene in the Indian market. This review summarizes the market sentiments for the chemical within the country and highlights the factors implicating the prices.

The demand for PA has gained momentum within the country on account of strong DOP (Dibutyl Phthalate) and DBP (Dibutyl Phthalate) sales, which is primarily driven by strong PV sales (in all segments). Also, the supply parameters haven't moved out of control as well, with normalised import shipments coming into the country.

As such, in these conditions there is a market expectations that the price will gain momentum. Instead the prices, especially the ex-work prices, have dipped on account of price competition of domestic manufacturers.

According to data gathered by Indianpetrochem, the basic price of  Herdillia and Thirumalai Chemicals have been on a downtrend since the past few months. The average basic price for Herdillia manufactured product was around Rs. 106 per kg in February thereon it declined to Rs. 101 per kg in March to Rs. 91 per kg in April and as of this month the prices have dwindled to Rs. 86 per kg,  all prices are exclusive of all taxes.

 In similar fashion, Thirumalai Chemicals has been conducting a downward price revision for Phthalic Anhydride, whereby the basic price was around Rs. 105 per kg in February, thereafter the prices moved to Rs. 100 per kg, then Rs. 93.5 per kg  and in this month the basic price has moved to aroundRs. 91per kg, all prices are exclusive of all taxes.

Interestingly the price of Orthoxylene hasn't declined considerably this month, the bulk prices Ex- Mumbai have moved from Rs. 88 per kg to current trading range of Rs. 86 per kg, which isn't as dramatic decline as Phthalic Anhyrdride, all prices are exclusive of all taxes.

While in the past the downward price revision has been due to declining demand and surging imports for PA, the primary reason for latest downward price revision, as the website gathers from various industry officials, is due to price war initiated by Herdillia, following which Thirumalia Chemicals also declined its Ex-work price.

There is considerably uncertainty in the market regarding the price movement of PA in the Indian subcontinent, it will be interesting to see which direction the price for the chemical trails in the future