Dip in iodine consumption tips supply higher than demand

By Carrie Bone
Published: Friday, 26 June 2020

Monthly contract prices for iodine have narrowed this month, with cheaper material no longer available on the market despite some reports of a drop in consumption.

Fastmarkets’ price assessment for iodine, 99.5% min, contract, delivered US/Europe, cif Asia, was $34-37 per kg on Thursday June 25, narrowing upward from $30-37 per kg one month earlier.

Market sources said that there was no material available on the market at prices of less than $34 per kg, while $37 per kg was widely reported. Many market participants were keen to see stability in prices, rather than any potential decreases, which they did not believe would lead to a revival of demand.

There were reports of offers at prices down by $0.50-$1.00 per kg, because some buyers had stepped back from the market and slowed their purchasing, but this did not have any significant effect on trading.

Most market participants told Fastmarkets that the derivatives sector - chemicals used for agriculture, and for industrial and pharmaceutical purposes - had seen a reduction in demand, with many consumers either unable to shop for products in the way they usually would, due to Covid-19-related lockdowns, or without the confidence to do so.

This included products such as LCD screens, in addition to the dramatic drop in aviation and the suspension of the automotive sector, which had reduced demand for products such as vehicle tires and nylon.

The contrast-media sector reported acceptable demand levels, however, with postponed non-essential medical procedures now restarting.

For products such as disinfectants, a small increase in demand had been reported, although some market sources reported a dip in demand for products such as hand gels, with consumers opting for cheaper materials.

As a result of this decrease in demand, some buyers were postponing purchases while others did not expect to step back into the market again before September.

"The market is quiet, and normal trade routes are more difficult than usual. Some players have full stocks, and the demand-versus-supply ratio is on the side of supply. If they wait, the price will drop. The half-year contract prices are stable," a distributor said.

"We bought heavily at the end of [the January-March] quarter and have more inventory than we need. We were fearful of supply chain interruptions, so bought ahead," a second distributor said.

"We had a good April, there was stockpiling, but now there is less travel, less automotive, [and] we’ve seen a 20% decrease in iodine usage," he added. "If demand is not there, it’s not there. A price decrease would be a bad thing for us, because of our inventory. Everyone is now competing for the same business. We had some cancellations and… we don’t see any robustness to the market."

While sentiment was not positive among some market participants, others saw an opportunity to build up inventories.

"Everyone is trying to assess the effects of the [Covid-19] pandemic, [and] there are positive signs from India that demand is picking up again. In some sectors, there is a drop in demand, but other sectors are not affected," a producer source said.

"We expect to sell less but this will not affect the pricing," he added. "Stock levels were very low [and] now we can rebuild stocks but sacrifice some sales. We expect demand to pick up rapidly after the crisis - the world will need more iodine. We were anticipating an increase in the half-year contracts but that was cancelled."

On the weekly market, Fastmarkets’ price assessment for iodine, 99.5% min, spot, delivered US/Europe, cif Asia, was unchanged at $35-39 per kg on Thursday.

Many market participants noted that prices had stopped moving upward in pursuit of the $40 per kg price goal that, before the pandemic set in, many had expected to see by the end of 2020. But again, they were keen to achieve stability in the price rather than see any downward movement.

More like this