Acetic Acid Market in Belgium Eyes Expansion Amidst Economic Clarity in Q1 2024

Antwerp (Belgium): The stability of Acetic Acid prices this week is largely attributed to subdued support from its feedstock, Methanol. Import prices from Europe have also demonstrated steadiness, in line with stable Natural Gas prices. The European Central Bank's decision to maintain a 4.5% interest rate has diminished the buying capacity of downstream consumers of Acetic Acid. Methanex noted that upstream methanol contract pricing for Acetic Acid remained low throughout February in the European market. Furthermore, there have been no significant disruptions in the supply chain this week, guaranteeing ample inventories to satisfy the demand of downstream industries.

Peter R. Huntsman, serving as Chairman, President, and Chief Executive Officers (CEO), pointed out a moderate upturn in early 2024 compared to the downturn experienced in the fourth quarter of 2023. Despite uncertainties regarding when demand will fully rebound, Huntsman expresses optimism regarding the future. He anticipates advantages from increased volume once demand rises and underscores the importance of cost management. Although the exact timeline for recovery remains uncertain, there is confidence in the resurgence of Acetic Acid downstream construction spending and industrial activity in key markets. The company maintains its focus on energy efficiency and lightweight materials, which are substantial contributors to overall sales.

However, the economic landscape presents formidable challenges. In Germany and other regions, weak demand and substantial inventories of Acetic Acid in the industrial sector have resulted in a 3.9% decline in activity since mid-2022, contributing to a more than 6% decrease in Belgian exports during the same period. Restrictive monetary policies have dampened residential construction activity, with household investment in housing dropping by over 11.5% since mid-2021, leading to an overall decline in the Acetic Acid market. Furthermore, persistent pandemic disruptions, supply chain issues, spikes in energy prices, rising commodity costs, and geopolitical uncertainties have further unsettled the economy. Given Belgium's highly open economy, these factors create a potential recipe for an economic downturn.

Anticipations suggest that Acetic Acid prices in the Belgian market will rise due to a decrease in the interest rate, potentially boosting the purchasing power of downstream industry consumers. Energy costs are also expected to increase, and the price of upstream Acetic Acid is likely to follow suit, resulting in higher production costs. Moreover, import prices from international markets such as China, a top exporter of Acetic Acid to Belgium, are expected to escalate, further increasing the domestic cost of Acetic Acid in the Belgian market.