Sluggish market trades slump the global H-Acid prices amid demand disruption in Dec 2023

Busan, South Korea: In the month concluding the year 2023, the prices of H-Acid showcased a significant dip in its trend followed by a decline in the price of its feedstock market. The bearishness in the market situation was due to the sluggish demand from the downstream textile industries which made it difficult for the market players to sell H-Acid at  profitable rates.

In the USA market, a decline of 2% was recorded due to the lower demand from the downstream textile industries and the increase of H-Acid inventory levels. Due to the disruption caused by the Houthi attack in the Red Sea, shipments of goods from China to the USA experienced delays. To navigate the situation, ships were redirected around the Cape of Good Hope, resulting in an additional 9-10 days for the shipments. The Xenata shipping index reported a 5.619% increase in ocean freight charges. In December 2023, the US Manufacturing PMI showed a decline compared to the PMI in November 2023, indicating a significant deterioration in manufacturing conditions. Output resumed a downward trend, and the slowdown in new orders intensified, reflecting challenges in both domestic and international demand. Consequently, companies adjusted their input procurement and hiring practices accordingly. Along with the sufficient inventory level of H-Acid in the storage facilities, the prices of its upstream market, Naphthalene, and Sulphuric Acid were recorded to be declining whereas the prices of Ammonia followed an upward trend. This resulted in lower operational costs for H-Acid, contributing to the downward price trend.

Similarly, the prices of H-Acid in the South Korean market followed a downward trend of 4% and settled at USD 4700/MT (CFR-Busan) on 29th December 2023. Trading between the Chinese and South Korean markets decelerated as a result of ample stockpiles in storage facilities. To prevent an excess of the H-Acid in the market, producers opted to decrease production rates. Despite the low demand from downstream textile enterprises, the market experienced a surplus of supplies, contributing to a downward trend in prices. In December 2023, Statistics Korea reported that the Consumer Price Index (CPI) stood at 112.71, showing no change from the previous month and indicating a 3.2 percent increase compared to the same month in the previous year. Additionally, South Korea's Purchasing Managers' Index (PMI) experienced a decrease in December 2023 when compared to November 2023.

Accumulated inventories among the storage facilities and reduced demand contributed to a downward price trend for the H-Acid. In the upstream market, Sulphuric Acid, Ammonia, and Naphthalene prices also experienced a similar decline, leading to a decrease in operational costs for the product. Additionally, with the year-end approaching, traders aimed to deplete their current inventories, offering discounts on bulk purchases and lowering ex-quotations, albeit at the expense of their profit margins. Despite these enticing offers, buyers hesitated to increase their purchasing activities due to concerns about potential supply surpluses. Regarding the spread between H-Acid and its feedstocks, a minimal difference was observed, signaling a bearish sentiment in the H-Acid market.

According to ChemAnalyst, it is anticipated that in the upcoming weeks, H-Acid may experience a decline in the price trend as a sufficient amount of inventory levels are present which can fulfill the slowly rising demand from the downstream textile industries for the next few weeks. This bearish market situation may result in a declined price trend as the market players might provide discounts on H-Acid prices due to the low anticipated demand from the downstream sectors.