US Acetic Acid Prices Poise for Improvement Amidst Growing Demand from Downstream Acetates

Louisiana (USA): Currently, US Acetic Acid prices have remained stable, largely due to consistent market dynamics. The steady pricing of methanol, a key input, has supported a gradual but consistent growth pattern in the Acetic Acid sector. Furthermore, the affordability of natural gas has kept production costs low, resulting in reduced expenses for producers. Looking ahead, there is a possibility of Acetic Acid prices rising, driven by increasing demand from the Ethyl Acetate and Butyl Acetate industries. Although market progress is somewhat affected by fluctuations in downstream sectors, short-term expansion is anticipated, especially due to heightened demand from the construction industry.

Overall, the outlook for Acetic Acid in the US market appears positive. Additionally, the shortage of skilled labour presents additional challenges for the construction industry, which is a major consumer of Acetic Acid. Several states are implementing measures to bolster the construction workforce, including funding apprenticeship programs, providing grants to specific industries, and investing in community college programs, aiming to cultivate a domestic pipeline of skilled construction workers. These developments are likely to bring positive sentiments in the Acetic Acid market. In states like Montana, apprentices participate in state programs that link them with industry sponsors. The US construction industry suffered a 30% decline during the 2008 recession and had barely recovered before the onset of the COVID-19 pandemic. Therefore, these challenges currently faced by the construction industry, a major user of Acetic Acid, are leading to an overall decline in the market growth of Acetic Acid downstream industries in the US.

The industry's supply dynamics have remained stable, with Acetic Acid plants operating consistently due to steady demand from downstream sectors. Despite the US's PMI staying above 50, indicating manufacturing expansion, there has been significant improvement in manufacturing activity, creating an optimistic market view for Acetic Acid. Since December 2023, the PMI value has remained strong, signifying favourable progress in overall manufacturing operations. Additionally, as of the current week, there have been no significant disruptions in the supply chain reported, resulting in ample inventories in the market and contributing to the restrained growth of Acetic Acid.

Demand from Acetic Acid downstream industries like Ethyl Acetate and Butyl Acetate has remained relatively stable, largely due to their close ties to the construction sector. As construction demand has been somewhat subdued, the government is taking proactive measures to reform the construction industry, particularly by addressing labour force issues. Despite these challenges, the construction industry, a significant consumer of Ethyl Acetate and Butyl Acetate, has demonstrated growth potential. Additionally, there is an anticipation that the construction sector will sustain its momentum through the first quarter of 2024, further leading to a positive outlook in the Acetic Acid industry in the US market in the upcoming months of the quarter.