Bearish market sentiment for solvents in India; IPA an exceptional case – 28 Mar 2014

Across major trading hubs in India, the price for various solvents declined due to ample imports and sluggish demand conditions from buyers on account of financial closing. In this market review, Indianpetrochem takes a comprehensive view on this matter and highlights the solvents which closed in red and green this week.

Acetone prices have declined by Rs. 2- 3 per kg and settled at Rs. 83.25 per kg (exclusive of all taxes), Ex- Kandla and Ex- Mumbai. In similar fashion, Phenol price declined by Rs. 2 per kg and settled within the trading range Rs. 98.50- 100 per kg (exclusive of taxes).

Indianpetrochem from conversation with various traders comprehends that huge stock inventories and poor demand has lead traders to offer discount on bulk price (Rs. 75.25 per kg) of Benzene by Rs. 1.5- 2 per kg. Toluene and Mix Xylene prices are currently at lows of Rs. 69.5 per kg (exclusive of all taxes) and Rs. 80 per kg (exclusive of all taxes), respectively. While Ortho Xylene prices have remained stable at Rs. 92 per kg (exclusive of all taxes).

On this account, a trader in Ahmedabad market informed the website, " Traders have built strong inventories over the past few months, however, due to weak international and domestic market cues, the uptakes have been poor. presently the market is faced with the financial year end situation, where buyers are refraining from bulk purchases and traders are desperate for stock clearance. Hence, the price fall to attract more buyers; however, the results have been disappointing as most buyers are adopting a wait and watch game".

Amidst the bearish market sentiment for most solvents across major trading hubs in India, there has been one clear winner in terms of prices, i.e, Iso Propyl Alcohol (IPA).

The website gathers from various market sources that stock uptakes for IPA have been strong and steady from end-user industry in the past few months . This has positively pushed up prices from levels of Rs. 92 per liter (exclusive of all taxes) to Rs. 94 per liter (exclusive of all taxes), according to data gathered by Indianpetrochem.

According to a market insider, "The stock position for IPA is weak amongst importers and there are limited importers who have any stock for the solvent. Over and above, those that do hold any stock position for IPA, have very low inventories to suffice demand. Hence, most traders feel that short supply situation for IPA will surge the price by Rs. 2- 3 per liter by next week".

Overall, with the exception of IPA, the prices for most solvents have witnessed a bear market rally this month due to the financial closing but there is a positive outlook in the medium to long term based on strong macroeconomic indicators in India.