Global IPA Industry to Benefit from Bullish Market Sentiments

Isopropyl alcohol (IPA), one of the most demanded chemicals these days, has recorded several weeks hike in its international prices which were heard up to almost double this week. The astonishing increase in the IPA prices has been attributed to its skyrocketing demand as a key disinfectant in hand sanitizers and alcohol wipes. CDC has recommended the use of alcohol-based hand sanitizers with more than 60% ethanol or 70% isopropanol in its composition that is effective against the viruses that lie under the category of Covid-19.

The outbreak of pandemic was a tipping point in the IPA market after WHO recommended the use of alcohol-based hand rubs as one of the means for rapidly and effectively inactivating potentially harmful microorganisms transmitted through hands. Since the declaration, alcohol -based hand sanitizers have become the most sought-after product in the global markets. As the global demand outstrips the supply, the disinfectant chemicals manufacturers are boosting their sanitizer production in their fight against Covid-19.

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Market Study

In FY18, the total annual demand for IPA in India was about 135KT and touched 170KT by FY19. About 80 per cent of IPA demand in India is driven by the pharmaceutical sector with about 40% of the IPA requirement being met through imports to fulfil the high demand from the growing pharmaceuticals sector. Total demand for Isopropyl Alcohol in India, which in FY20 stood at about 200KTPA has been shot up by around 25 per cent since the start of March this year. This sudden surge in demand for IPA is backed by high demand for sanitizers on rising concerns for cleanliness and personal hygiene as a preventive measure for Covid-19. Isopropyl Alcohol (IPA), the premier compound used in sanitizers, is being manufactured in India solely by Deepak Fertilizers having a capacity of around 70KTPA. The company satisfies about 57% of the country’s total demand with rest of the demand being met through imports.

IPA Pricing Analysis

Despite soaring demand and rise in international prices, the prices of IPA in India declined marginally after March 5 as an outcome of restrictions imposed by the government to prevail the availability of sanitizers at an affordable price. IPA has turned out to be the most preferred chemical commodity among its other alternatives due to its superior properties. Although the domestic prices currently lie between INR 69-72 per kg, IPA prices are anticipated to climb to INR 95-100 per Kg taking into consideration the surging demand in the domestic market. Moreover, with disruption in supply chain, profitability of the domestic manufacturers as the sole provider of the product is anticipated to witness a significant rise.