DOP price surges by 7% in New Delhi – 10 Jan 2014

End user demand for Dioctyl Phthalate (DOP) remains steady, even strong, as some might say in New Delhi market. While the demand remains moderate, the price of the chemical increased by Rs. 10 to Rs. 143 per kg in New Delhi, within the past 20 days.

DOP was consistently selling at Rs. 133 per kg during the last half of September until the last half of December. The prices have been increasing consistently ever since 21st of December, 2013. On the 1st of January, the prices reached all time high of Rs. 143 per kg in New Delhi, which is the highest in the past six months.

In order to comprehend the current situation, Indianpetrochem spoke to a leading distributor for the chemical in Delhi. They revealed that the current price hike is because of limited availability of the feedstock, which is required to manufacture DOP, in India due to unexpected plant shutdown of the manufacturing unit for that feedstock. As a consequence of this, the market experienced an unexpected shortfall in procuring of the raw material required to produce DOP. The distributor further added that this shortfall could not be immediately fulfilled by cheaper and ample import supplies, hence,  the price spiked for the feed stock; eventually, this escalated the price of the plasticizer as well.

Indianpetrochem investigated on this matter and  found out that Phthalic Anhydride, which is one of the main raw materials for DOP, manufactured by IG petrochemical went for a "planned" shutdown in the month of November for a period of three weeks . According to a press release, this shutdown was planned such that "the product supplies to the customers would remain unaffected during the outage". 

Comparative analysis of past six months data indicates that the prices just about peaked at Rs. 135 per kg during the month of August, 2013,  hence, by far the current highs are significantly greater than the past.

DOP is a plasterizer used in PVC resins for fabricating flexible vinyl. End user products like  vinyl upholstery, tablecloth, shower, curtain, raincoat, shoes, garden houses, swimming pools liners, polymeric coating, cable coating, component of paper & paperboard, defoaming agents, surface lubricants etc are made using DOP.

Given the widespread uses of the chemicals, its safe to say that the demand for DOP is inelastic in a growing economy like India. Considering this along with the fact that there is lack of transparency in the market, leaves one to comprehend there is significant scope for price manipulation in India.