Price correction noted for MIBK in India but is it sufficient to uplift its market sentiments? – 24 Apr 2014

This market review captures the price trend for MIBK in the Indian markets in the past few month by examining its bulk and booking prices. Also, as the chemical is substitutability with other solvents in the Indian market, this review also analyses the price trend for its substitutable chemicals, which are used as solvents amongst end user industries.

The bulk prices for MIBK Ex-Kandla hovered in the range of Rs. 134 per kg (exclusive of all taxes) in the last week of February. From these levels, the price for the chemical has declined to current trading range of Rs. 125- 126 per kg Ex Kandla, exclusive of all taxes.

Major reason for the price correction of MIBK is due to decline in international booking price for the chemical, the website gathers from various sources.

"The Indian booking price for MIBK declined from $ 2,000 metric tonne CIF to current levels of $1,850- 1,900 CIF, due to softening international demand", a prominent importer told the website.

At present the booking price is around about $1875 per metric tonne FOB India, a decline of $80-85 per metric tonne is noted since the past month.

According to the websites conversation with a prominent Mumbai based importer, the bulk prices have moved down due to strengthening in the rupee and weak international market dynamics; whereby huge stocks inventories and weak global demand has resulted in downward price moment of Indian booking price for the chemical.

While the prices have pulled down within the past few weeks, the demand for the chemical has been "stable to weak" in the country. In India, MIBK is mainly used as a solvent in the pharmaceutical and rubber chemical industry, whereby the demand from theses industries has been moderate to stable.

As MIBK is easily substitutable as a solvent in the in some end user industry with other chemicals like Ethyl Acetate and Butyl Acetate, as such the price form MIBK cant move significantly higher than these chemical.

Recently, the price for Ethyl Acetate spiked on account of a domestic plant shutdown and its feedstock situation. As such, currently the basic price for the chemical from Jubliant Life Science is around Rs.64 per kg, exclusive of all taxes.  Most participants speculate that its price jumped to Rs. 72-75 per kg, exclusive of all taxes, due to various reasons. 

Overall, market participants anticipate that the demand growth for MIBK isn't like to immediately gain any momentum in the near term, however in the long run, within six months or so, there is a positive outlook on the demand traction for the chemical in India. There are some industry experts who feel that the current price decline is appropriate price correction for the chemical in the Indian market; this in return would push demand in the future.