China's MA Market Faces 8.5% Decline in Second Week of January 2024

Shanghai (China): In the second week of January 2024, China's maleic anhydride (MA) market witnessed a significant 8.5% decline compared to the previous week, driven by a confluence of factors impacting the industry. Weakening demand from crucial downstream sectors, including furniture and tableware, alongside a slowdown in construction projects, played a pivotal role in this notable decrease.

One of the contributing factors to the decline was the presence of high inventory levels, a consequence of increased production towards the end of 2023. As a result, producers aimed to clear excess stocks, exerting downward pressure on MA prices. Government interventions, aimed at curbing price hikes, indirectly influenced the MA market by alleviating cost pressures on downstream industries, further contributing to the weakening demand for MA.

In the first week of January 2024, Maleic Anhydride prices have observed some improvement and prices were assessed at USD 1140/MT on FOB basis. While the prices have sharply fallen in the second week and the same trend has been observed in the next couple of weeks.

In the European and the US market, MA prices have also witnessed stagnancy amidst stable market dynamics.

Despite the challenges, feedstock costs, particularly butane prices, remained elevated but relatively stable. This stability in feedstock costs limited significant cost-driven increases in MA production expenses. However, regional variations were apparent, with prices in Eastern China experiencing a slight dip due to higher inventory levels and lower transportation costs. Meanwhile, Western and Central China maintained relatively stable to slightly higher prices, influenced by elevated transportation costs and concentrated demand from furniture and tableware industries.

The impact on various industries within China was notable, resulting in lower MA prices that benefited users in sectors such as furniture, tableware, and resin production, particularly those facing cost pressures. The decline in prices is likely to have influenced the profitability of MA producers, with outcomes depending on individual production costs, hedging strategies, and inventory levels.

Looking ahead, the future trajectory of MA prices in China remains uncertain and contingent on several factors. Meanwhile, the European and US MA prices are likely to remain rangebound with minimum fluctuation in the second half of January 2024. The global economic recovery, fluctuations in feedstock costs, regional demand trends, and effective inventory management strategies will play crucial roles in determining the market's direction. Industry stakeholders are closely monitoring these factors to navigate the evolving landscape of China's MA market in the coming months.