In continuation to our last market report, we are once again presenting the current market report of a slightly changed scenario.




In the last 2 months, prices of Crude Mentha Oil slid down to a lowest of INR 1300 per Kg and an average of INR 1350 per Kg from an average rate of INR 1450-1500 per Kg between June to mid-September 2012. The main reason for this downslide was that the MCX, which was holding a huge stock of 16000-17000 drums of Mentha Oil till August end, started to offload the same & in the months of September-November 2012, it offloaded almost 10000 Drums of oil. This created a huge selling pressure in the market & also dragged down the physical market prices.


As we mentioned above, this trend has not been witnessed in the past years i.e. in June-July 2012, 16000-17000 Drums of Oil was deposited in MCX & about 10000 drums out of the same was liquidated in Sept-Nov 2012. This is abnormal as the stock which is deposited at the MCX is usually either liquidated at when the prices shoot up suddenly from existing level to a very good level or in February/March when the new crop is planted.


Currency Fluctuation is one more factor affecting the export prices and in the past 2 months, the USD depreciated from INR 55-56 per dollar to INR 53 per dollar & in fact it touched the lowest of INR 51.50 also. This movement of USD unfortunately nullified the benefit of the dip in Oil prices as far as export prices are concerned.




The Oil prices as on date are INR 1500 per Kg. Presently, there is just a stock of 6000-6500 drums on MCX, which translates to almost nil selling pressure and in fact the prices on MCX now are so attractive that the farmers have again started depositing Oil on MCX. This also means that there is no selling pressure on the farmers also. This again is abnormal as during Nov-Dec, there has never been any depositing of Oil on MCX in the past years. This aggressive price on the MCX has created positive sentiments in the mind of farmers & stockists who have Oil & now they want to wait for even better rates. They firmly believe that the prices that they have seen in last crop year are achievable & in fact since the average procurement cost of Oil for stockists this year has been INR 1450 per kg, they want to make a good profit on their investment as they did last year.


Another major reason for these positive sentiments is the delay on the part of BASF in supplying the quantities of synthetic menthol it promised in the last quarter of this year, till the 1st quarter of next calendar year. In fact, there are rumors that this delay may be repeated in the 1st quarter of next year also & the supplies of synthetic menthol may eventually materialize in 2nd quarter of 2013 & hence the demand for the crop year June 2012-May 2013 might be fulfilled from natural Menthol only. These speculations are also fuelling the holding tendency among the farmers & stockists.


Another factor contributing to this price rise currently is that the “ pan masala/Gutkha” manufacturers have found a way around the ban which the Indian Govt. imposed on the chewing tobacco based mouth freshener and which had for some time reduced the demand for commercial grade Crystal. They have found that if they pack chewing tobacco separately & the mouth freshener separately instead of a pre-mixed mouth freshener, this ban is not applicable. Hence they have now developed those capacities & their production is on an upswing again.


USD is currently at a rate of INR 55 per dollar & has risen to this level from INR 51.50 per dollar a few days back. This has created a cushion of approx. 5% in the export prices against the sudden rise in Oil prices.


Overall, we would like to mention here that we had proposed the lowest level of Oil in this quarter & an increase in the next quarter in our last market report. We had estimated the lowest prices around INR 1250 and the Oil reached 1300 before this upswing. We feel that it is because of BASF’s failure to deliver in this quarter which has just accelerated the time table which we estimated & the bottom & the subsequent upswing came in November instead of December 2012.




We expect that this upward trend will now continue in this quarter & the 1st quarter of 2013. As we suggested in our last report, we expect the Oil prices to increase by approx. INR 300-400 per Kg from its lowest level of INR 1300 before any correction can be witnessed somewhere around 2nd quarter of 2013. The quantum of this correction in the 2nd quarter will also depend on whether BASF delivers synthetic as promised in the 1st quarter or again defers deliveries. If it delivers, the correction will be because of new crop expectations & synthetic arrival & will be more & if not, then the quantum will only be because of new crop & will be lesser.


However, we still expect a considerable reduction in prices in 2nd / 3rd quarter of the calendar year 2013 because of a good quantity of natural as well as synthetic production & also because of a good quantity of pipeline stock.


Also, the current level of USD @ INR 55 can reach INR 57 in the near future as per the currency advisors & bank projections before settling down with an average of INR 50-52 for the calendar year 2013.


Likewise, our current tentative prices are as follows.


Menthol Bold Crystal : USD 31.25 per kg

Menthol Small Crystals : USD 30.25 per kg

Menthol Powder : USD 28.50 per kg

Crude Mentha Oil : USD 26.00 per Kg

DMO Terpene-less : USD 24.00 per kg

DMO with Terpene : USD 23.25 per Kg


We sincerely hope that this market report will live up to your expectations & will help you plan your procurements accordingly. We look forward to your valued response & counterviews, if any.