Ethyl Acetate Market in Turmoil as US Construction Downturn Takes Toll

Texas (USA): As of this week, the pricing of Ethyl Acetate has remained stable, primarily influenced by the subdued performance of the Upstream Acetic Acid market. This downturn has, in turn, hindered the growth of the downstream Ethyl Acetate market. Additionally, demand from international markets like Canada has been relatively low. On the production side, plants have been operating normally despite weak demand in the downstream sector, contributing to a notable accumulation of inventories in the market.

The demand from the downstream construction industry for Ethyl Acetate remained robust, thanks to a prolonged 17-month boom in the non-residential construction sector driven by the flourishing US manufacturing industry. However, a contrasting trend was observed in the US existing home sales, which plummeted to a 13-year low. This decline was attributed to the highest mortgage rates in two decades and a shortage of available houses, prompting buyers to withdraw from the market. Additionally, the US interest rate stood at 5.1%, impacting the purchasing power of consumers in downstream industries, as it directly correlates with mortgage rates. The increased interest rates led to negative sentiments among Ethyl Acetate downstream construction industries, and the housing market bore the brunt of the US central bank's aggressive monetary policy tightening, experiencing a contraction in residential investment for nine consecutive quarters. The minutes of the Federal Reserve's meeting from October 31 to November 1, published on Tuesday, revealed that a few participants noted a plateau in activity within the housing sector in recent months. This flattening was attributed to the likely impact of additional increases in mortgage rates, which were already at elevated levels. Furthermore, Ethyl Acetate inventories remained on the higher side, leading to subdued Ethyl Acetate market growth.

According to the ChemAnalyst database, there is an anticipation of a decline in the price of Ethyl Acetate this year, primarily influenced by the underperformance of the Ethyl Acetate feedstock Acetic Acid. The market is also expected to undergo destocking activities, resulting in the sale of inventories at reduced prices. On the production side, the price of Natural Gas is projected to be on the lower end due to sluggish manufacturing activity in the market. However, in February 2024, Ethyl Acetate prices are predicted to strengthen due to increased demand from Ethyl Acetate downstream industries, particularly the Construction sector. Additionally, there is an expectation of higher energy costs as the prices of Natural Gas are anticipated to rise from an energy perspective.