MINT AND MENTHOL FOR KV AROMATICS INDIA
PAST
The Mentha oil prices which was roaming within October-November 2014 at around INR 700 / Kg approx. These prices were started increases during December 2014 and touched the highest level at INR 820/Kg in the physical market and finally settle down to around INR 800/Kg.
The Mentha Oil prices had increased to that extend because firstly, the arrival of Mentha Oil in the physical market was very less and also, the major Manufacturers & Exporters covered very short stocks during that period. On the other hand, the prices on MCX did not increases to that extend as compared to prices in the physical market in the month of January 2015 because there was sufficient availability of Sellers on MCX which restrict prices to increased much as compared to spot prices. As a result, the prices on MCX remain lesser then prices in the physical market which influenced major Exporters & Manufacturers start taking deliveries from MCX instead of spot market for their own consumption, due to which there was huge reduction of stocks of oil from 27000 Drums to 20000 Drums on MCX till the end of January 2015.
We would also like to emphasis that during that period, although the prices of Mentha Oil in the physical market increases more than 15% to 18% but Export prices does not increased much because of two major factors as below:
- The USD against Indian Rupee had been appreciated during that period.
- The manufacturing margins of Finished Goods has been reduce down even below the ground level or below the cost.
PRESENT
The current prices of Mentha Oil in the physical market are around INR 800/ Kg and stabilized at the same level from last few weeks. It is because the demand of Menthol Crystals is being increased in the Domestic market as well as in the Overseas market as compared to last two months. The said increased demand is being fulfilled by taking stocks from MCX and also the arrival of Mentha Oil is slightly increases, firstly, now weather conditions are comparatively favorable as compared to earlier days which was too cold. Secondly, As the new plantation season would be close so the farmers are willing to sell their old stocks to reduce down their inventory to build economic strength for new plantation.
The stocks in China is also reducing down because the major players in China is buying less quantity of Raw material from India in last few months as they are consuming their own stocks.
Regarding Plantation of new crop:
Earlier when the prices are on lower side, farmers sentiments for growing new roots was not too good, so they grew less roots in their fields for new crop. Now plantation has started in India slowly. so now the availability of Roots is less which resulted higher prices of roots, so there will be chances of more transplant crop during this season.
But, on the other hand, we would also emphasis that in the last one year, farmers has not earned much from other crops as well, for example Sugercane prices are also less so farmers are not getting even their cost, Rice prices is almost half as compared to last year, Wheat prices, which are usually increases by around 20-30% after season, but this year it is quite stable, Potato prices are drastically reduces to one third as compared to earlier. So, the sentiments of the Farmers are not only less in Mentha crop but also, they are getting less profit in the other major crops as well. As a result, we didn’t expect the reduction in plantation in a big way mainly in the eastern U.P. where farmers are comparatively poor & labour cost is also very less as compared to the western U.P., which impact the overall reduction of crop by 20-30% this year as compared to last year on an average.
Further, we would also like to focus on one point that in the last year, the yield was too good because of less rain and favorable weather conditions, resulting sufficient production of Mentha oil.
It may also depend on the recovery of Mentha Oil from crop i.e. yield after the harvesting this year, that can also play major role on the total productivity of Mentha oil in the coming season.
FUTURE
As we have explained about the various factors of plantation of this year, although we can expect slightly less production of mentha crop this year but it may compensate by carryover stocks. On the other hand, also explain one point, the major quantity in the carryover stock is occupying by the stock of higher prices that will come into the market when the oil prices are of similar prices at which they have procured the said inventory, so that may consider as a dead stock.
In addition, the another major factor which will also play a vital role is the conversion of US Dollar in Calendar year 2015, as the Indian Economy is reviving quickly & GDP growth also may reach 6.5 during this Calendar year, supporting by interest rate to be reduced down in India, due to which the chances of Indian Rupee to be appreciated that can influence the Export prices in the upward trend but on the other hand, the weakening of Euro & economic conditions of European region including the question of Greece sustainability within EU, also fluctuate the INR against USD which may also impact export prices further.
As a result of all above factors, we expect the prices of Menthol Crystals in the Export market between the band of US$ 15/Kg (Plus, Minus $ 1) to US$ 18/Kg (Plus, Minus $1) on an average during this Calendar year.
Please note It is only our opinion and we are only described the practical situation of Mentha crop & market scenario in near future.
We hope we have been able to communicate the current situation as accurately as possible with future possibilities & this report will help you in your decisions.
The current Tentative prices of the following products are:
Menthol Crystals Large @ US$ 15.75/Kg CIF Sea
DMO, TL @ US$ 11/Kg CIF Sea
Cis-3-Hexenol 98% pure & natural @ US$ 295/Kg CIF Air.