Increased Downstream Demand and Constrained Industrial Output Soar US AEM Prices in June

Texas, USA: Though the prices of both the feedstocks, Ethylene, and Acrylic Acid, were consistently plunging in the USA market throughout June, the prices of Ethylene Acrylic Acid (AEM) kept surging during the month. After showcasing only, a rise of 2.8% in May, the AEM market price soared by a drastic 13.4% in June. Experts believe there are only two possible explanations for the increasing AEM prices: a significant increase in downstream demand and a contracting industrial activity on the one hand, where the market performance of the downstream automotive industry improved significantly during the considered month. On the other, the manufacturing sector of the USA contracted further.

New light vehicle (NLV) sales in the United States increased by more than 20% in June compared to the same month last year as consumers continued to show their willingness to buy despite higher-than-usual prices and higher-than-normal interest rates. The surge in sales was attributed to improved supply chain efficiency, pent-up consumer demand following the pandemic, and an improved dealer inventory level. The chemical industry has faced several challenges in recent years, including declining dealer inventory levels due to global supply chain disruptions and a shortage of semiconductors. However, the growing popularity of the Electric Vehicle (EV) and hybrid vehicle market is projected to increase car demand. The US Bureau of Economic Analysis (BEA) reported that automotive industry sales were about 13% higher in the first six months of 2023 than they were in the first half of 2023. Based on the data provided by the BEA, it can be concluded that the US automotive industry had a positive market sentiment in the first two quarters of the year, which supported the rise in the AEM market.

Furthermore, as per several market reports, automobile sales in Western Europe were about 19.6% higher in June as compared to last year's same month. Not only that, but auto sales also rebounded by approximately 18% year-on-year in South Korea and by about 20% y-o-y in Japan. As the USA is a global leader in AEM manufacturing, every other European and Asian country depends on USA exports to fulfill their AEM demand. Since both the global and domestic automotive industries were performing well in the market, the demand for AEM increased notably.

According to market reports, the Purchasing Manager's Index (PMI) for June was 46.3, which was lower than the 48.4 recorded in May. This indicates that the US manufacturing sector experienced further decreased activity during the month. There was a sharp drop in the number of new orders for various commodities and a decrease in industrial output. This caused the manufacturing sector to contract even more. As the manufacturing sector's condition deteriorated in June, AEM's production decreased, resulting in a decrease in inventories. This contributed to the increase in AEM's market value. ChemAnalyst predicts that AEM's price will continue to rise in the US market until the end of Q3 due to an increase in automotive consumption.