US Butyl Acrylate Market Faces Decline Amid Construction Challenges

Texas, USA: The Butyl Acrylate market in the US is exhibiting a stable yet bearish trend, primarily driven by a reduction in production costs due to lower prices of key feedstocks, n-butanol, and acrylic acid. Additionally, demand for Butyl Acrylate from downstream sectors such as coatings and construction is also on the decline, further dampening market sentiment.

The Butyl Acrylate market in the US remained steady at a lower level, priced at USD 1570/MT (DEL-Texas) during the week ending 13th September. Despite the stability in the Butyl Acrylate market, the market continues to hover at the lower end due to the ongoing decline in demand for Butyl Acrylate from downstream sectors such as coatings and construction. In the construction sector, U.S. single-family homebuilding witnessed a sharp rebound in August, though a modest rise in building permits suggested the momentum might not last amid an increasing supply of new homes which is decreasing the demand for Butyl Acrylate due to the sufficient availability of Butyl Acrylate. The U.S. Commerce Department's report on Wednesday attributed the surge in housing starts to the fading impact of Hurricane Beryl, which had slowed homebuilding in the South. However, homebuilders may still face challenges from rising inventories of pre-owned homes, despite the Federal Reserve's 50 basis point rate cut on Wednesday, the first since 2020.

"A further decline in single-family construction activity is expected in the coming months as homebuilders appear to have overreacted to the minor uptick in new home sales in 2023, leaving them with surplus inventory," said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. "Lower mortgage rates will provide some support to demand for new homes, but only at the margin."

In addition, permits for future single-family home construction rose by 2.8%, reaching a rate of 967,000 units, though this was 0.5% lower compared to the previous year. Single-family homebuilding had declined for five consecutive months due to a spike in mortgage rates in the spring, which dampened home sales and led to an oversupply of newly built houses. However, the increase in supply has been uneven, and affordability remains a challenge that is unlikely to improve with lower mortgage rates. Overall, housing completions rose by 9.2% to a rate of 1.788 million units, while the number of housing units under construction fell by 1.9% to 1.509 million units, the lowest level since November 2021.

Additionally, economist Veronica Clark from Citigroup noted, "New construction projects are unlikely to return to the levels seen a few years ago. This implies that as current units under construction are completed without being matched by an equivalent number of new projects, overall construction activity will decrease."

According to ChemAnalyst, the Butyl Acrylate market in the US is projected to experience further decline, driven by an anticipated drop in demand for Butyl Acrylate from downstream coatings and construction sectors, amid the ongoing hurricane season and surplus inventory levels of Butyl Acrylate.