Slack demand Weakens Isopropyl Alcohol in the Chinese Market
- 17-Aug-2022 4:15 PM
- Journalist: Nina Jiang
Qingdao, China: The pricing sentiments for Isopropyl Alcohol witness a continuous decrement following the first week of August. Various factors contributed to this path, including the resurgence in covid cases leading to the imposition of lockdowns in major business cities, such as Shanghai and Beijing and also affected trading momentum in the Chinese domestic market. The pharmaceutical sector primarily contributes in terms of demand for Isopropyl Alcohol as China is the Major manufacturer of IPA globally. The revival of the COVID-19 pandemic in major industrial hubs resulted in a zero-tolerance policy and severe lockdowns, causing disruptions in the supply-demand outlook in the domestic market.
China's strict pandemic restrictions led to shutdowns and reduction in manufacturing activities amidst the supply disruptions across several provinces, causing an economic slowdown in the Northeast Asian region. Currently, China's real estate sector is observing several financial distress amidst the Evergrande crisis leading to further disruption in the upstream of numerous essential chemicals used in the building and construction sector. As a ripple effect, it weakens the sentiments of the domestic participants that further, coupled with regional price competitiveness, led to a significant reduction in the offers of IPA in the spot market.
With the resurgence in the cases following the economic woes, the market participants are looking to clear their existing inventories instead of ordering newer stock to prevent the declining profit margin besides maintaining substantial netbacks. Additionally, the supply rate of IPA is anticipated to become even more constrained due to the fluctuation in oil prices, which directly affects the trading environment in other regions. Another element supporting the price trajectory is varying upstream raw material Costs, impacting the manufacturing momentum and availability.
According to Chemanalyst, IPA prices are expected to diminish during the forthcoming August week. Crude oil cost is likely to fluctuate at a constant rate, and the US authorities will soon restock the national reserves in the short term, further inflating the prices of Crude Oil in the international market. Trading momentum might witness a slower pace, and upstream raw material prices might remain lower, which might be the primary factor affecting the overall market sentiments of Isopropyl Alcohol in China for the short term.