Acetic Acid Market Fall in US Amid Weak Cost from the Feedstock Methanol

Hamburg (Germany): Throughout the current week, the price of Acetic Acid has demonstrated stability, largely driven by the lacklustre cost support from methanol, thereby maintaining contract prices at a constant level. Furthermore, the unwavering nature of natural gas prices has played a role in sustaining consistent production costs. Import prices, specifically from China, have exhibited stability during this period, with the supply chain experiencing no notable disruptions, resulting in ample inventories within the market. Short-term projections suggest a potential decline in Acetic Acid prices in December, attributed to diminishing import costs and elevated inventory levels. However, as we transition into January 2024, an anticipated increase in prices is expected due to heightened market transactions and the upward trajectory of feedstock costs.

In terms of production, the plants sustained a consistent operational pace, buoyed by a continuous inflow of imports from the global market. Furthermore, the quoted prices for Acetic Acid feedstock methanol by Methanex remained unchanged, providing a foundation for stable production costs.

As for domestic demand, Acetic Acid downstream industries, such as ethyl and butyl acetate, faced diminished demand, predominantly influenced by the lacklustre performance of the construction sector. Furthermore, the Purchasing Managers' Index (PMI) registered a value of 44.20 in November, indicating a contraction in the manufacturing sector.

According to the Chem Analyst Database, there is an anticipation of a decrease in the price of Acetic Acid in December. This is attributed to the decline in import prices, particularly from the Chinese market, which holds significance as China is a major exporter of Acetic Acid to Germany. Additionally, the sustained high-interest rates are expected to constrain the purchasing capacity of Acetic Acid downstream industries, especially within the construction sector, where key consumers like ethyl acetate and butyl acetate are extensively used. The continuation of a 4.5% interest rate, as declared by the European Central Bank to manage inflation, further contributes to this trend.

Looking ahead to January, it is anticipated that prices will remain subdued due to reduced market transactions during the holiday season. However, a surge in demand is expected in early January, post the holiday period. Contrary to this temporary dip, prices are foreseen to rise in February, driven by increased demand from Acetic Acid downstream industries such as ethyl and butyl acetate. Positive market sentiments in Acetic Acid are expected, with restocking activities playing a pivotal role. Additionally, the price of natural gas is predicted to increase, leading to higher production costs. A similar situation is foreseen in the prices of feedstock methanol, with a projected rise in February contributing to elevated production costs of Acetic Acid. Moreover, import prices from the Chinese market are expected to climb, resulting in higher inventory costs in the domestic market.