Global H-Acid Market Grapples with Bearish Sentiments in February 2024

Antwerp, Belgium: Globally, the prices of H-Acid followed a downward trend due to the lackluster demand from the downstream Textile sector and accumulated inventory levels in the storage units. The equilibrium between supply and demand was disrupted due to the disturbance in the supply chain of H-Acid. Due to the Lunar New Year in China in February 2024, the market players stocked up their inventory levels of H-Acid for the potential demand from the downstream Textile sectors. Furthermore, many market traders left the market earlier for the New Year celebration.

In February 2024, the prices of H-Acid in Belgium saw a significant downturn of 6.44% and settled at USD 4500/MT (CFR-Antwerp). This was attributed to Belgium's reliance on imports of H-Acid from China, where the Lunar New Year festivities led traders to stock up on inventory in anticipation of heightened demand from the textile sector. However, the Chinese New Year celebrations resulted in subdued market activity for H-Acid shipments, with many traders exiting before the festival began. Additionally, sales that would typically occur during the holiday period were moved up to January, affecting sales data leading up to the holiday. This anticipation led to muted trading activities between the Chinese and Belgian markets. According to the Xenata Shipping Index, freight charges from Asia to Europe saw a decline of 9.83%, indicating reduced shipping activity between these regions. The Manufacturing Purchasing Managers' Index (PMI) also showed a slight uptick to 46.5, indicating a slower decline in manufacturing sector conditions compared to the previous month. This was the second-slowest deterioration recorded since March 2023, with new orders decreasing at the slowest pace since March 2023. Employment continued to decline for the ninth consecutive month, while supplier delivery times shortened. Both input costs and output charges continued to decrease, while business confidence remained relatively stable compared to the previous month. According to Statistics Belgium, the Consumer Price Index (CPI) rose to 131.01 points in February from 130.08 points in January 2024, with consumer prices increasing by 0.71% during the month, following a 0.49% increase in January.

In addition, feedstock markets of H-Acid saw a decline in prices for key materials such as Ammonia, Sulphuric Acid, and Naphthalene. This downward trend in feedstock prices provided support to H-Acid prices, as the decreased production costs for these materials translated to lower costs for producing H-Acid.

In the South Korean market, the prices of H-Acid experienced a decline due to the buildup of inventory in storage units. South Korea imports H-Acid from China, prompting market players to increase trading activities in January 2024 and the first week of February 2024 in anticipation of the Lunar New Year in China. This stocking-up was done to meet potential demand for H-Acid from downstream Textile sectors. Despite a severe snowstorm in China in February 2024, which hampered trading activities, existing inventories were sufficient to meet demand from downstream sectors. In February 2024, according to Statistics Korea, the Consumer Price Index (CPI) in South Korea climbed to 113.77 points from January's 113.15 points, signaling heightened consumer engagement in the market. Monthly, consumer prices surged by 0.5%, surpassing the 0.4% increase seen in the previous month. This growth represents the most rapid escalation since September. Additionally, based on the Xenata Shipping Index, freight charges from China to South Korea experienced a decrease of 1.46% in February 2024. In terms of the upstream market, the prices of the feedstocks, Sulphuric Acid, Ammonia, and Naphthalene showcased a declining trend and provided cost support to the prices of H-Acid by lowering the production cost of the commodity.

Similarly, the decline in H-Acid prices in the United States was attributed to an accumulation of inventory levels in storage units. Given that the US also imports H-Acid from China, market participants ramped up their trading activities before the Spring Festival in February 2024. During this period, they strategically stocked up on H-Acid to meet potential demand from downstream Textile sectors. As per the Xenata Shipping Index, a 4.04% increase in freight charges from China to the US was reported. Conversely, in the upstream market, prices of key feedstocks such as Sulphuric Acid, Ammonia, and Naphthalene showed a decreasing trend. This decline in feedstock prices provided cost support for H-Acid prices by lowering the production cost of the commodity. The favorable movement in feedstock prices had a positive impact on the overall cost structure of H-Acid. In February 2024, the Manufacturing Purchasing Managers' Index (PMI) in the United States witnessed a notable uptick compared to January 2024. The most recent data points towards a swift expansion in the country's manufacturing sector, signifying the fastest growth observed since July 2022. Notably, output levels have experienced a substantial increase since May 2022, contributing to the overall surge in new orders, which is the most robust in 21 months. Furthermore, there has been a noteworthy rebound in new export orders, which had previously declined for three consecutive months, now reaching their highest rate since May 2022.

As per ChemAnalyst, the prices of H-Acid are anticipated to increase in the upcoming week due to the potential surge in the demand from the downstream textile sectors which might incline the prices of H-Acid due to the disturbance in the equilibrium between supply and demand for the product.