Restricted stearic acid supply from Godrej triggers price increase in India – 23 Jan 2014

The price of cosmetic grade stearic acid is at all time high within six month period in New Delhi market, where the chemical sells at around Rs. 102-104 per kg. Supply disruptions from Godrej manufacturing facility in Mumbai is cited to be the main reason for the spike in price. In the interim, the demand for stearic acid has been inelastic to the upswing in prices due to strong cyclical demand from end user industries.

The chemical was selling at Rs. 80 per kg in the month of August and September in New Delhi market. Since October, 2013, the price of the chemical has been increasing continuously by Rs. 3 per kg every month. In December, the price for cosmetic grade stearic acid reached Rs.90 per kg. The price stabilized at this levels until the last week of December, thereafter, the price jumped by Rs.12 per kg within two weeks.

Indianpetrochem investigated on this matter and discovered that the main reason for the upswing in prices within the 2nd week of January, 2014, was due to shortfall in supply in the market. A trader told the website "Godrej has 90 % market share for stearic acid in India. There has been a disruption in supply of Godrej manufactured stearic acid in the market due to unexpected plant shutdown at the  Mumbai manufacturing unit". The website tried to contact the company on this matter but Godrej hasn't replied to any correspondence.

Apart from Godrej, there are other national players like Adani Wilmar and V V S, who manufacture and distribute cosmetic grade stearic acid across the country. Local players like SK company, whose distribution is limited to North India, are also there in the market, but sales are ultimately based on the brand strength in the market and Godrej is the most superior of all.

As such, a disruption in supply of Godrej manufactured products will have astronomical impact on the price of cosmetic grade stearic acid in India.

However, its interesting to take note of the fact that the demand for stearic acid has been stable, infact strong, amid the price fluctuations. This is primary because the chemical is used to manufacture cosmetic products and creams, which are in great demand during winter season.

Stearic acid is mainly used in the production of detergents, soaps, and cosmetics such as shampoos and shaving cream products.