UK Acetic Acid Prices Surge Amid Rising Methanol Costs

Southampton (UK): In the UK market, prices of Acetic Acid have been steadily rising, mainly due to the increasing costs of its raw material, Methanol. Methanex's monthly report has highlighted a consistent uptrend in Methanol contract prices since April, exerting further pressure on Acetic Acid prices.

Additionally, demand from the Acetic Acid downstream construction industry has increased but at a slower pace, attributed to a decline in the issuance of building permits and persistently high building costs, indicating a challenging outlook for the sector ahead. However, there is a positive aspect as prices of existing homes are experiencing an increase, potentially stimulating sales of new builds.

Furthermore, the European Central Bank has maintained interest rates stable at 4.5% since 2024. On another front, the Euro Area Manufacturing PMI value has declined, indicating a sustained contraction in manufacturing activity. Natural Gas prices in Europe have remained low, leading to reduced LNG prices and subsequently lowering production costs, which can be attributed to the conclusion of the heating season.

Acetic Acid import prices from China have risen this week, contributing to an overall increase in import costs. Additionally, the ongoing Red Sea crisis poses a significant challenge to the European market, elongating import routes from Asia and resulting in elevated freight prices. Although there has been a decrease in freight prices from their peak in March, overall charges remain relatively high. Internationally, the ongoing Red Sea crisis persists, causing disruptions to the supply chain from the Asian Acetic Acid market, with no resolution in sight.

On the domestic front, Acetic Acid production plants are operating at peak capacity to meet the demand of Acetic Acid downstream industries, particularly in the thriving construction sector. Additionally, Acetic Acid feedstock Methanol prices remain high, as indicated by Methanex's pricing list, which is further driving up production costs.

February's PMI data showed a slight improvement in average global supplier delivery times compared to January, where there was a trend of increasing delays. The delays in January were largely attributed to shipping disruptions caused by rerouting vessels away from attacks by the Yemen-based Houthi militant group in the Red Sea, en route to the Suez Canal.

Demand from Acetic Acid downstream industries such as Ethyl Acetate and Butyl Acetate remained robust. According to a recent survey, there was a slight expansion in Britain's construction industry last month, marking the first growth since August 2023. This development is contributing to increasing optimism regarding the economy's recovery following a recession in the latter part of 2023.