Rising Feedstock Propylene Oxide Costs Slightly Drive Up US Cellulose Ether Prices

The market situation for Cellulose Ether observed a marginal bullish situation in the United States due to an increment of approximately 2% being witnessed in the prices of feedstock Propylene Oxide, which inclined production costs in November 2023, with further increments being anticipated towards the end of December mainly driven by increased prices of Propylene Oxide optimistic purchasing sentiments owing to the festive demand.

The prime reason for the current high demand for Cellulose Ether was the consequence of many retail giants such as Walmart, Best Buy, and The Home Depot offering healthy discounts due to Thanksgiving Day. The National Retail Federation reports that the number of shoppers who made holiday-related purchases in November 2023 amounted to almost 200 million, putting pressure on the existing inventories of Cellulose Ether. Heavy discounts were recorded to have been offered by the retail giants for FMCG products and electronics to attract consumers and keep purchasing sentiments optimistic, thereby further driving the demand for Cellulose Ether amidst the already inclined production costs. Demand for Cellulose Ether from the primary paint and coating sector and the refinement of Crude Oil continues to be subdued as the progressing winter season halted most of the construction activities in the United States, and demand from the oil refining sector was also not strong as demand for gasoline and diesel depreciated by another 4% in November 2023. Increased purchasing activities are also supported by improving economic conditions, as indicated by the intentions of Federal Banks to keep the interest rates unchanged in December and declining inflation rates which were recorded at 3.24% in November.

The present winter season has also contributed to the high demand for feedstock Propylene Oxide, which is also used to produce Propylene Glycol, primarily used in the cosmetics and skincare industries. This consequently increased the prices of feedstock Propylene Oxide, which further increased the production costs of Cellulose Ether.

The market situation of Cellulose Ether is expected to be driven by the prices of feedstock Propylene Oxide, which are expected to increase further due to the high seasonal demand from the cosmetics and skincare industries due to the progressing winter season.

The prices of Cellulose Ether are expected to remain marginally bullish until March 2024 as the winter season is expected to keep construction activities minimal in the United States, which is expected to depress the activities in the downstream paints and coating sector. The only present demand for Cellulose Ether is recorded from the secondary downstream FMCG sector due to healthy purchasing activities by the local populace.