Global IPA Industry to Benefit from Bullish Market Sentiments

1. Edition: 31st March 2020 #TheChemAnalystExpress Global IPA Industry to Benefit from Bullish Market Sentiments Key Headlines •RIL’s refining margins to remain weak, coronavirus takes a toll on demand •U.S. FDA grants Sun Pharma’s Halol plant under official action indicated status •Lackluster demand darkens crude oil futures •Lockdown days, Home cooking pushes up LPG demand in India •Asian aromatics market heavily weighed amid coronavirus crises Global Isopropyl Alcohol (IPA) Weekly Pricing Analysis (4th Week, March 2020) 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. U.S. In the last week of March, the response of U.S to coronavirus heightened and consequently triggered spike in the IPA demand. Until this week, U.S. IPA was showing a nominal price rise on weekly basis, however rapid rise in the number of positive coronavirus cases has shot up the domestic demand. However, the recorded IPA spot prices were in the range of $1,367-1,874/tonne FOB US Gulf. Major US IPA suppliers include ExxonMobil, Dow Chemical, LyondellBasell, Monument Chemical and Shell Chemical. US. is expected to have more active cases of coronavirus than China and Italy, hence, IPA demand in U.S. is likely to surpass that in Europe in the coming weeks. Europe Prices on the Isopropanol (IPA) in Europe have skyrocketed, reaching a historic high, because the demand is outstripping supply as sales of hand gels and other sanitizing products has boosted amid the coronavirus outbreak. European IPA Technical grade prices rose to $1,990-2,430/tonne and Cosmetic or Pharmaceutical grade rose to $2,320-2,650/tonne, as compared to the prices from the pre-pandemic levels of $990 per MT.

2. Asia Iso Propanol prices in Asia surged tremendously this month, recording 67-weeks high this week due to boost in demand from countries like Malaysia, Singapore, and Indonesia for utilizing in downstream sectors like disinfectants and hand sanitizers. Moreover, disruptions in supply chain due to lockdown measures adopted to contain the spread of the virus are further adding to elevated prices. IPA prices CFR southeast (SE) Asia surged at around $900-1,000/tonne CFR (cost & freight) SE Asia. Monthly IPA Price Chart 2500 2000 USD/ Tonne 1500 1000 500 0 Jul'19 Aug'19 Sep'19 Oct'19 Nov'19 Dec'19 Jan'20 Feb'20 Mar'20 CFR SE Asia FOB US Gulf CFR NWE India IPA Market Analysis 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 Weekly IPA Price Chart 960 950 USD/Tonne 940 930 920 910 900

3. 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. Global ventures into Sanitizer production to break records of IPA demand •Dow starts sanitizer production in Germany In order to fight against rising coronavirus cases in Germany, Dow has started a hand sanitizer production in Stade, Germany. The production unit can produce up to 300 tonnes per month of hand sanitizer and the produced sanitizer will be made available to the government authorities to be further sold in the pharmacies and hospitals, free of cost. Dow’s initiative was supported by Olin which is ensuring regular supply of glycerin to produce hand sanitizers. Dow is also planning to re-purpose one of its units in U.S. to produce hand sanitizer over there. The plant started on 20th March and has started delivering the product. •INEOS boosting hand sanitizer production in UK and Germany INEOS has aimed to complete two of its targeted hand sanitizer plants in UK and Germany by the first week of April. The plants will be capable of producing up to 1 million bottles of hand sanitizers per month. The company took this initiative to address the current sanitizer shortage in Europe, one of the countries mostly hit by the pandemic. The company produces the key raw materials for hand sanitizers - isopropanol (IPA) and ethanol - in Grangemouth and Germany’s Moers and Herne sites. The company has IPA production capacities of 155KTPA at Moers and of 85KTPA in Herne while ethanol production units in Grangemouth produce 330KTPA. •BASF to commence production of IPA at Ludwigshafen Petrochemical To alleviate supply bottlenecks, BASF is looking forward to starting the production of sanitizers at Ludwigshafen petrochemical hub. The company has been quick to secure required regulatory approval to commence the production of the key raw material-Isopropyl Alcohol. BASF aims to provide free supplies of sanitizers to regional hospitals with its limited capacity of production. Earlier, the company was engaged in the production of raw materials required for manufacturing of disinfectants. •Shell to contribute towards IPA production to combat demand rises amid coronavirus As reported by the commercial product manager, Shell is all set to manufacture 2.5m Litres of Isopropyl Alcohol for the production of disinfectants and distribute it for free. The purpose behind this free distribution is to serve the society to constrain the spread of the virus so that the situation can be improved. •MOL Hungarian Oil and Gas PLC starts production of hand sanitizers MOL Hungarian Oil and Gas PLC is an integrated oil and gas company which is involved into production of crude oil, bitumen, petroleum products and natural gas. The company has recently converted a windshield washer production line at its facilities in Almasfuzito, Hungary, into sanitizer production unit which can produce up to 50,000 liters per day of hand sanitizer. This extraordinary step taken by the company is to satisfy the demand for hand sanitizers in Europe after the region became the epicenter of the coronavirus. Global Plant Shutdown News •North American Refinery Announced Shutdown amid Drifting Demand for Fuel North Atlantic Refinery Limited to idle the Come by Chance Refinery, as fuel demand plummets due to Coronavirus outbreak. According to a report, the plant may be shut for a period of 2-5 months. This unprecedented slump in fuel demand is making refiners around the globe to cut their production to prevent losses. The situation is expected to continue as the outbreak spread is worsening across U.S contributing to stringent preventive measures like lockdowns on several other parts which may lead to shut down of several other companies.

4. Strategic Expansions •SK Gas Partners with Advanced Petrochemical to build a Gas Chemical Plant South Korea’s SK Gas secured a joint venture agreement to build a $ 1.8 billion gas chemical plant with Saudi Arabia’s Advanced Petrochemical Co. (APC). SK Gas Petrochemical is reported to carry a 15 per cent share in this joint venture. The plant will be setup in Jubail Industrial city of South Korea and is expected to begin with a production capacity of 80000 tonnes each of polypropylene and propylene by late 2023. Latest Technological Investments •Lummus Technology and Basell to provide Technologies for Gas Chemical Plant in South Korea Lummus Technology will provide CATAFIN Technology for the new 834KTA Propane Dehydrogenation Plant in South Korea. Whereas the technology for polypropylene plants will be SPHERIPOL Technology which will be licensed by Basell Poliolefine Italia. The gas chemical plant is a joint venture between Advanced Petrochemicals and SK GAS of South Korea and is expected to be completed by late 2023. Get the Chemical and Petrochemical Industry News on Daily Basis, Weekly- Trend & Forecast and Monthly-Analyst Views Subscribe Today! News on WhatsApp/WeChat/Mail First 15 days free news WhatsApp No. +91-9914868686 For sales related query, dial +91-9958299626 or email at sales@chemanalyst.com About ChemAnalyst About ChemAnalyst ChemAnalyst is ‘one stop’ online portal that offers comprehensive market intelligence data and in-depth analysis on the Indian chemical and petrochemical industry. Our aim is to provide competitive advantage to the industry stakeholders by offering ‘cutting edge’ information and analysis that help our customers leverage on the emerging opportunities in their businesses. ChemAnalyst’s team of 100+ analysts are engaged in tracking Chemical Prices daily, production capacity, demand and supply outlook, manufacturing plant locations, foreign trade data and news/deals for more than 400 major chemicals produced in India. ChemAnalyst’s Interactive subscription platform provides the most comprehensive data and analysis in your industry to help you decide the future. ChemAnalyst is promoted by TechSci Research (TSR). TSR is an award winning research based management consulting firm providing market research and advisory solutions to the customers worldwide, spanning a range of industries including Chemicals & Material, Automotive, Consumer & Retail, ICT, Energy & Power, Aerospace & Defense, Water and Waste Management, BFSI and more. For more information, please visit us at www.chemanalyst.com