Uptrend in Acetic Acid Prices Amid Rising Downstream Demand and Premium Import Costs

In the staring week of October, Acetic Acid prices in the U.S. and European markets showed contrasting trends in September, influenced by varying economic and industry factors in each region.

In the U.S., Acetic Acid prices increased, driven by a surge in demand from the paints and coatings industry. This demand boost coincided with improved home builder confidence in September, following a decline in mortgage rates, which ended a four-month downturn. According to the market sources, the Housing Market Index rose in September, up from August, marking the first positive outlook for future home sales since May.

Despite rising Acetic Acid demand, ample stock levels in the U.S. market helped moderate the rate of price increases. The Federal Reserve is also expected to begin a rate-cutting cycle after its policy meeting, potentially affecting economic activity in the housing and construction sectors. Earlier data showed U.S. construction spending fell more than expected in July, as an oversupply of homes impacted single-family homebuilding. Additionally, rising housing inventory has led to increased competition among builders, although the sentiment on future sales has improved. The easing of mortgage rates has allowed builders to maintain home prices, with fewer builders cutting prices for the first time since April.

In align with US trends, the European Acetic Acid market remained subdued throughout September, with prices reflecting broader economic challenges across the Eurozone. However, the starting week of October Acetic Acid prices in Europe saw a rise due to increased import prices from China. However, this upward trend is being dampened by several factors, including weak demand for Acetic Acid downstream Purified Terephthalic Acid (PTA) from the plastics and polyester industries, as well as declining upstream Methanol prices, as reported by Methanex.

The recent restart of several Acetic Acid downstream PTA plants after maintenance shutdowns has resulted in an oversupply, further weakening the market. Additionally, crude oil prices have dropped, reducing production costs during this period.

The broader economic outlook in Europe remains concerning, with the Eurozone’s manufacturing PMI falling in September, down from August, marking over two years of consecutive monthly contractions. Output declines were particularly sharp in France and Germany, with weaker demand and rising order backlogs leading to further production cuts across the region. Pessimism remains high, particularly in the Asia-Northern Europe trade route, where falling freight rates have signalled continued weak demand. While the U.S. market is seeing a gradual recovery bolstered by the housing sector, Europe remains in a more challenging position, with weaker demand and economic pressures limiting price growth.

According to ChemAnalyst, Acetic Acid prices are expected to rise in both the U.S. and Europe due to increasing Acetic Acid feedstock Methanol prices and stronger demand from Acetic Acid downstream sectors, particularly Purified Terephthalic Acid (PTA) and Vinyl Acetate Monomer (VAM). In the U.S., the construction sector is expected to experience growth, supported by a strengthening housing market. However, the outlook for the European construction sector remains pessimistic, with demand from downstream industries likely to remain weak.