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Menthol Crystals and Mentha oil

CURRENT MENTHA MARKET REPORT - 3 May 2019

Mentha Oil price are INR 1530 per KG at Sambhal, Uttar Pradesh, India, as of 3rd May 2019, with US $1 being equivalent to INR 69.20 at the time of preparation of this report.

This year we are expecting higher production of Mentha Oil from the last year, due to which Mentha Oil industry is confused and divided on what will be the future trend of the markets.

Guru’s of industry are of the opinion that the prices for Mentha Oil will reduce looking at the big crop size of current year, this is creating confusion in the complete chain that prices would be pressurized during crop arrival period.

But we have different opinion, according to our analysis current prices are already a bottom or very near bottom prices, but if the situations support the prices can increase by 30% also.

Why we reached to such assumption: Supporting Factors

  1. Inventories by manufacturers are poor and Exporters are already trying to cover the short positions due to forward sales of shipments and good demand. Consumers and end users are at very low levels, everyone waiting for new crop arrival.

  2. It’s a first time in the history; stock on MCX is 360 drums only. Max market will go down by INR 100 to 150/kg, this is the last down fall and it would be stable at this price.

  3. This year would be same situation, farmers will not sell the goods at one tranche, they would take risk and sell in small pockets, farmers would sell only if the prices increase and holding back if prices fall, arrivals would be at slow pace. Stocking by farmers this year is seen between 60-65%, against the normal holding of below 50%, indicating strong price expectations by the farming community. Stockiest also are expecting better price returns and would like to hold goods for longer period.

 What can go wrong for Natural Mentha Oil?

  1. Indian Synthetic L- Menthol : Lot of Synthetic L Menthol is produced in India now, which does not have markets but is hugely used for Blending in Natural Mentha oil, Menthol and majorly in DMO, Peppermint Oil and Piperita. If accept a hit tance of this blended material increases in the market then it will bring negative impact of the prices of Natural Mentha oil and Menthol.

  2. Synthetic Menthol BASF, if this menthol also comes into the market and production increases then there will be a negative impact of natural Mentha Oil and Menthol prices.

Both the above factors will bifurcate the demand between synthetic and natural and thus the prices of natural Mentha Oil and Menthol can take a hit due to less demand of natural Mentha Oil and Menthol.  

As on today If we compare with synthetic (BASF) and natural prices both are almost on same level. But the prices of crude are expected to increase thus the availability will be less and price will increase propositionally. Which can give opportunity to natural Mentha Oil and Menthol to Prosper.

This year if we saw the export data of this financial year 2018-19 export of DMO is approx 174% higher from the last year. (FY 2017-18 – 8772 MT and in FY 2018-19 – 24014 MT), reason behind that in India now synthetic menthol production is on full flash, its produced by Meta cresol. Blending ratio can go up to (50% synthetic & 50% natural). This Blending Brings the prices down. 

We are giving some assumption of last 5 years and current year production, carry over stock and consumption figures: 

 

Year

2014

2015

2016

2017

2018

2019

Opening Balance

4800

12244

11591

2831

-6169

-1169

Estimated Production

46000

42000

35800

36000

43000

44000

Availability

52814

54244

47391

38831

36831

42831

Total demand

40570

42653

44560

45000

38000

40000

Balance

12244

11591

2831

-6169

-1169

2831

 

The current year is expected to be one of the historical years in trade with every participant waiting to get its share in market with positive approach toward the market, basically in Natural Mentha Oil.

If you have any queries please feel free to contact us: sales1@indiannaturaloils.com

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