The global peppermint (Mentha) oil market, with India at its helm, is experiencing a wave of turbulence following the abrupt hike in U.S. tariffs. Uttar Pradesh, the linchpin of India’s Mentha oil industry and a vital global supplier, now faces a crisis as the United States imposes a prohibitive 50% tariff on Indian peppermint oil and related exports. Producers and exporters warn that this measure, cited as retaliation over geopolitical tensions, threatens to upend supply chains, wipe out profit margins, and destabilize rural economies.
At the heart of the turmoil, the landed cost of Indian Mentha oil for U.S. buyers has surged from USD 20 to USD 30 per unit, slashing U.S. demand almost overnight. This shock not only imperils the earnings of more than a million farmers across north India but also puts at stake the livelihoods of workers in Rampur and Moradabad—key processing and exporting hubs. The moratorium on orders, alongside shifting contracts worth millions to alternative suppliers, compounds the export sector’s woes. In response, industry federations are urgently appealing for government relief and longer-term negotiating solutions. While some industry voices maintain hope that this turmoil may be short-lived, the current sentiment is of uncertainty and high risk for all market participants.
📈 Prices
| Exchange / Location | Product | Closing Price | Prev. Price | Weekly Change | Market Sentiment |
|---|---|---|---|---|---|
| Kairo (FOB) | Peppermint dry 98% (EG) | 1.93 EUR/kg | 1.94 EUR/kg | -0.01 EUR (-0.5%) | Bearish |
🌍 Supply & Demand
- Uttar Pradesh, India: Over 1 million farmers and thousands of factory workers depend on mentha oil. U.S. tariffs have immediately stalled a major share of exports.
- Export Orders: U.S. orders worth >$36 million in Moradabad halted, $18 million worth of business shifting to rival suppliers (e.g., China, Brazil).
- Production: Spring-summer harvest was average but with margins wiped out by higher tariffs, unsold stocks are expected to rise locally.
- Factory/Worker Impact: Exporters cite mass layoffs and potential factory closures if the U.S. market does not reopen soon.
- Global Competition: Shift in U.S. procurement likely benefits lower-tariff nations, pressuring Indian exporters further.
📊 Fundamentals
- USDA & Trade Reports: Expectation of static or reduced U.S. imports from India due to landed price over $30/unit, hampering demand recovery.
- Speculative Positioning: Weak. Traders anticipate downward price trends as inventories build and order books shrink.
- Global Inventories: Inventory build-up in India contrasts with drawdowns in global consuming markets (U.S., Europe).
- Macroeconomic Factors: Strengthening USD and broad global trade tensions are added headwinds for Indian mentha oil exporters.
🌦️ Weather Outlook
- India—Uttar Pradesh: Recent monsoon has been normal with scattered patchy rainfall. Soil moisture conditions are largely favorable, so no major weather-induced yield losses are expected for the ongoing season.
- Egypt & Competing Origins: North Africa experienced ideal late-spring weather, resulting in stable to improved dry peppermint supply for Egyptian exporters.
🌍 Global Production & Stocks Comparison
| Country | 2023 Production (tons) | 2023 Exports (tons) | 2019-23 CAGR (%) | Estimated Stocks (2024) |
|---|---|---|---|---|
| India | 45,000 | 35,000 | -1.5% | ~8,000 (rising) |
| China | 7,000 | 5,500 | +2.2% | ~1,200 |
| Egypt | 5,500 | 4,800 | +1.0% | ~700 |
| United States | 3,200 | 2,000 | Flat | ~650 |
📆 Trading & Outlook
- Careful risk management necessary for Indian exporters—watch for updates on tariff negotiations.
- Buyers in Europe and the Middle East may find short-term price bargains as Indian stocks build up.
- Egyptian and Chinese suppliers expected to attract incremental U.S. demand; premiums over Indian prices likely.
- Factory and midstream companies should prepare for further workforce adjustments if demand does not recover by October.
- Short-term: Bearish for Indian-origin mentha/peppermint. Medium-term hinges on bilateral talks and possible U.S. policy change.
📉 3-day Regional Price Forecast
| Location / Exchange | Product | Forecast Range (EUR) |
|---|---|---|
| Kairo | Peppermint dry 98% | 1.91 – 1.95 EUR/kg |
| Uttar Pradesh (spot) | Mentha oil, 99% | 1,770 – 1,790 EUR/ton |