MUMBAI: Importers of mentha oil and its derivatives are delaying shipments from India on expectations of a fall in prices once new crop arrivals begin next month. Prices are tipped to decline on the back of a 25% increase in mentha oil production this year and that compared with the previous year’s output.
Mentha oil, which is derived from mentha leaves and, along with its derivatives such as menthol crystals and flakes, is used as a raw material in toothpaste, tooth powder, pain balms, confectionery, fragrances and cosmetics.
India is the largest producer and exporter of mentha products in the world, with over 70% of its roduction catering for overseas demand. According to Sanjay Singhal of Sharp Menthol, some sellers are offering menthol crystals derived from the new crop at a discount of over 12% to the prevailing rate of $16 per kg, adding “Despite the discount, buyers are not entering the market”.
However, in the light of the cost of production incurred by farmers, Mr Singhal said $16-18 is a fair price for menthol crustals. Menthol crystal export prices have slumped from $86 per kg in 1996 to $16 currently, thanks to steep competition.
According to Kerala-based Spices Board, India exported around 19,000 tonne of mentha products in the financial year to February 2009 compared with 19,570 tonnes in corresponding period of FY08. According to RL Gupta, general secretary of Essential Oils Association of India, favourable weather could enable the country to produce 35,000 tonne of mentha oil this year against last year’s 27,000-28,000 tonne.
Keeping in the mind supply-demand fundamentals, Mr Gupta feels mentha oil price could fall from the current Rs 580/kg to Rs 525-Rs 550 once arrivals begin. However, he is quick to add that speculation, which is very high in the commodity, could pull up prices.
In the futures market, mentha oil May contract on MCX was marginally down from its previous close at Rs 552.80 per kg. The contract had been moving up after making a low at Rs 527 on April 30.
Source : The Economic Times