Lower Acetone And Propylene Cost Weigh On China's IPA Market

Chinese IPA market experienced a downward trend this week, with prices witnessing a decline of 3.5%. The average IPA price stood at 970 USD/ton, compared to the average of 1004 USD/ton on 25 May 2023. This price drop can be attributed to various factors affecting the domestic IPA market.

Reasons Behind The Downtrend

Let’s explore the factors impacting the Chinese IPA market:

1.   Weak Market Sentiments & Slow Shipments

Domestic IPA market sentiments were light, leading to a downward focus. Upstream factors such as falling acetone and propylene prices weakened the cost support for IPA. The reduced enthusiasm for procurement from downstream buyers resulted in slow shipments. Market participants adopted a cautious wait-and-see approach, leading to fewer inquiries and slower business activity. Last week, IPA prices in the Shandong region ranged from 928 to 970 USD/ton, while in the Jiangsu and Zhejiang regions, prices varied from 970-1040 USD/ton.

2.   Acetone Market Declines

Raw material acetone also experienced a decline this week. The average acetone price on 1 June 2023 was 842 USD/ton, compared to the average of 903 USD/ton on 25 May 2023, reflecting a reduction of 6.74%. The factory price reductions had a significant negative impact on the market. Despite the decrease in operating rates of domestic phenolic ketone plants and relatively low manufacturer inventory pressure, sluggish market trading persisted due to limited active inquiries from terminals and insufficient actual orders.

3.   Propylene Market’s Decreasing Trend

The propylene market witnessed a decrease in prices. The average propylene price in Shandong is 907 USD/ton, compared to the 25 May 2023 average of 978 USD/ton, reflecting a decline of 7.22%. The sluggish market demand and increased upstream inventory led factories to lower prices and destock. However, the limited increase in demand coupled with cautious downstream procurement and a strong wait-and-see sentiment resulted in a weak propylene market.

How Indian Market Will Affect?

In 2022, India’s 44.8% acetone and 28.4% IPA requirement were fulfilled by imports from China. China’s price and market trends affect India’s imports of acetone and IPA and any change in prices or supply directly impacts the Indian market.

Lower acetone and IPA prices in China can benefit Indian importers, leading to cost advantages and benefiting industries reliant on these chemicals. 

OFB’s Insight

IPA’s price decline can be attributed to the significant decrease in raw material prices for acetone and propylene. With weak support from raw material costs and sluggish downstream demand, the overall trading sentiment in the IPA market was poor. Market participants, including traders, exhibited low enthusiasm for procurement and lacked confidence. Most adopted a cautious and wait-and-see approach. As a result, it is expected that the IPA market will remain weak in the short term.

Read more: Global Ethyl Acetate Market: Prices, And Trends In Q1 2023

For real time commodity prices, latest news, and insights, please download the all NEW and all FREE OfBusiness APP.FULFILMENT CATEGORY