VAE RD Powder Prices Fall in the US Market Amidst Ongoing Sluggishness in the Construction Industry

Prices of VAE Redispersible Powder (VAE RD Powder) have depreciated by more than 6% in the US market throughout October 2023 as prices of Vinyl Acetate Monomer also plummeted by almost 6% despite prices of secondary feedstock witnessing a sharp incline of almost 11%.

Demand for VAE RD from the construction industry continued to stall as mortgage rates exceeded 8% in the week ending 27 October 2023. Current mortgage rates for a 30-year fixed contract term stand at approximately 8.3%, due to which fresh constructions were largely halted. This has largely cast a negative outlook amongst potential homebuyers, which further proved detrimental to the consumption of VAE RD Powder. Demand for VAE RD Powder from the paint and coating industry was also negatively affected due to the stalling of construction activities. Residential home purchasing sentiments continued to contract for the sixth straight consecutive month since moderate improvements were recorded in September 2022 as the Federal Bank increased interest rates by 80 basis points towards the end of October. This largely resulted in increasing input costs, which negatively affected real estate developers' ability to commence new projects, further slowing the consumption rate of VAE RD Powder.

The easing of VAE RD Powder's production costs did not help the VAE RD market situation, as exports to the Mexican and Canadian markets also declined. Even though house sales have largely increased in September, the sale of previously constructed homes largely dominated the market. As credit purchases tightened due to increasing interest rates, securing funds for projects by real estate developers became challenging. This consequently resulted in pushbacks for procuring inventory for the commencement of construction projects. Building permits also plummeted by more than 4% in October 2023, which largely resulted in the slow consumption of VAE RD Powder. Overall, only small single-family homes have shown a rebound, which proved ineffective in improving the market situation of VAE RD Powder. This consequently resulted in an oversupplied market, further depreciating the VAE RD Powder prices.

Prices of VAE RD Powder are expected to increase from November 2023 till January 2024 as production costs are likely to increase. The prime reason for this increment is largely attributed to increased demand for LPG, which is expected to peak during the winter months of 2023 and 2024, which lead to appreciation in the prices of upstream Crude Oil. Furthermore, demand from the downstream paint and coating sector is expected to improve during the festive holidays of December 2023.