In February, prices of Methylene Dichloride (MDC) in India were subject to fluctuations owing to various domestic and international market factors. Prices of MDC in the domestic market continued to slide for the first two weeks before stabilizing in the last week of the month, while the price index of imported MDC, particularly from large suppliers like China, displayed higher volatility. Price levels for imports, MDC kept steady in the beginning, followed by a steep fall in the third week of February. Then came the upsurge in price, which illustrated the blend dynamics involved in the international supply chain.

The variations in price for imported MDC are due to many reasons, such as the constant changes in the feedstock prices along with the geopolitical tensions. The prices for natural gas, a crucial feedstock, started to rise because of the tariffs imposed by the U.S. This made China impose a retaliatory levy on American energy imports between 10%-15%, making the production of MDC tarred with high costs.

Domestically produced MDC in India had a considerable dip in price throughout February. This is mainly due to the low demand from the API sector, a huge consumer of MDC, and the higher inventory level in the market. Thus, the authorized dealers in southern India have to offer very low prices to clear excess stock. Insufficient consumption of MDC by the pharmaceutical sector coupled with excess supply has compounded downward pressure on prices.

Other reasons for falling prices include greater production capacity encouraged by local manufacturers such as TGV SRAAC and Sreyas. As these companies ramped up production, a market that was already soaked with MDC was created, pressuring prices even lower. Given the rising production levels, buyers were, however, warned again about volatility in market prices that are expected to remain for the near future.

Market analysts believe that increasing methanol prices, an important feedstock for the production of MDC, continue to add to the various existing troubles surrounding domestic manufacturers. The inclining prices of methanol have rendered MDC production uneconomical for some producers, thereby playing a huge role in dictating price fluctuation in the Indian market.

The bearish sentiment, combined with subdued demand, requires buyers to be somewhat cautious towards the bulk buying contracts. Competition in the local area will be more intense among manufacturers, as they are trying to bring production costs down to clear the added volumes held in inventory. The price volatility is expected to continue over the close term owing to the uncertainty in the market. Buyers in such turbulent waters will have to remain sharply observant of market developments to obtain the best deals.