k-v-aromatics-private-limited-logo-120x120As you all must be aware, the spot prices of Crude Mentha Oil in India in early February were INR 1500 per Kg. At that time, most of the people were speculating a downtrend which was strengthened by two factors. One, there was a general downtrend since February onwards and second, the MCX was also showing lower prices in March, April & May 2013. These sentiments resulted in a lot of speculative selling by most of the people on MCX, with an aim to earn a quick profit in Feb end by depositing physical quantity procured at a lower price against the sales on MCX. It was at this time that a major manipulation took place. Some known speculators/operators/exporters of the trade started to buy on MCX & they bought quite a lot of Oil which was being sold by the people. It is a general trend that most of the sellers deliver the physical quantity on MCX at the end of the month. In Feb too, though some sellers delivered on or before 15th of Feb, most of them who were planning to deliver between 20th & 25th of February received a shocker from MCX in form of a notification which declared that no physical deliveries will be accepted after 20th February 2013. To add further to the misery of these sellers on MCX, those who somehow managed to deposit some quantities on MCX before 20th February were also shocked when most of their material was either rejected on quality grounds or their quality testing reports were delayed  much more than usual to stall deliveries. This resulted in a technical default of approximately 2000-3000 Drums of Oil on MCX which resulted into heavy penal losses on most of the sellers in addition to the fact that at all the times, the forward prices of March 2013 were less than almost INR 200 from the February prices. This excess stock combined with a huge difference in March prices on MCX forced the sellers to either buy their material back from MCX & sell in physical market to cut their losses or to face a huge loss on MCX in March

These activities resulted in two steep falls in February in the spot market. The first happened around 20th of February when the market came down from INR 1500 to INR 1450 because of the notification of MCX & another steeper fall happened in Feb end from INR 1450 to INR 1375-50 when most of the delivered quantities were also rejected or test reports delayed & ultimately the sold quantities bounced back on the sellers themselves.


The above factors have affected the physical market & have pushed the spot prices further down. The present prices of Crude Mentha Oil in physical market are in the range of INR 1275. This downward trend has resulted in most of the stockists & farmers who were holding their stocks in Jan-Feb to off load it rather sooner than later to minimize their losses. These also include those farmers & traders who till now were thinking about a repeat price trend in 1st & 2nd quarters of 2013 as happened in 2012. Their sentiments have also changed, thereby increasing the selling pressure. Another reason for this downtrend & weak sentiments is that the news from the growing area is positive. The crop area may increase or at the minimum, remain same. Due to all these factors, the arrival in Barabanki region is good presently although it is comparatively lesser in Sambhal.

Because of this scenario, even most of the manufacturers & manufacturers-exporters have also reduced their stocks considerably & aere working with just about 30% of the average stock levels.

On the other side, the buyers are also witnessing this down trend and they are also only buying for their immediate requirements. This has resulted in a selling pressure which is pushing the prices down.

If we talk of MCX, although we can see a decline/downtrend in March & April prices, the May & June prices are almost constant and what is basically happening is that the difference which was there between the MCX prices of March/April 2013 and that of May/June 2013 is reducing.


It looks that sometime in near future, we might see this difference get further reduced to almost nil & we could see similar prices for April, May & June 2013 which might then be stable. As we are observing, MCX is also showing a declining trend in the future months and we feel that we may see a slow but sure change in prices in the next 03 months & the prices for Mentha Oil may come to a level of INR 1150-1100 by June 2013. You may yourself observe that on MCX June prices are approx. at a difference of INR 100 per Kg from current month.

As far as US Dollar is concerned, it is currently roaming around INR 54-54.50, but as per Reserve Bank of India, this is not a realistic rate as it is more because of a slower economic growth in this quarter. But since the Crude Fuel Oil prices have reduced & are further reducing, the fiscal deficit is  expected to decrease, improving the economy, which will strengthen the INR upto 10% and the USD conversion rate may come down to INR 49-50 in next few quarters.

If this happens, it will affect the export prices negatively. A vice-versa may also happen, but the chances for it are slim.

Current Tentative Prices

1) Menthol Crystals-Large @ US$ 27.00, FOB

2) Menthol Crystals-Small @ US$ 26.00, FOB

3) Menthol Powder @ US$ 24.75, CIF Sea

4) Mentha Oil @ US$ 21.75, CIF Sea

5) Peppermint oil Terpenless @US$ 21.25, FOB

6) Peppermint oil EP (with Terpenes) @ US$ 20.50, FOB

7) Cornmint oil (Fractions of Cis-3 Hexenol) @ US$ 432.00, FOB

Forward purchases for Q3 are at a discount.