Weak Demand Slashes the Diacetone Alcohol Prices in the US Market

The price of Diacetone Alcohol (DAA) witnessed a declining trend in April 2023 due to the decreasing feedstock Benzene prices amid volatile upstream Crude Oil market values. Simultaneously, feedstock Propylene costs fell amid shifting upstream Naphtha costs due to uncertainty in Crude Oil prices and moderate demand for Propylene from downstream value chains. The link between U.S. inventories and oil prices is often strongly inverse, with dropping stockpiles driving prices upward and growing inventories having the opposite impact. However, significant price drops have not been stopped despite large inventory draws over the previous few weeks.

The demand for DAA in the U.S. market was not improved in April 2023, and the sufficient product availability in the market to cater to the demand from the downstream coating industries. Further, the inexpensive cost pressure from Acetone also contributed to the southwards price pattern. According to the U.S. Federal Reserve report, U.S. economic activity mainly remained unchanged, although employment growth had somewhat slowed, and price increases appeared to be slowing. Additionally, the stronger dollar dampened investor interest, which caused oil prices to fall.

According to The Conference Board (TCB), consumer confidence in the U.S. fell to a nine-month low in April, increasing the likelihood that the economy will experience a recession this year. However, the increase in new sales was marginal as manufacturers continued to DAA observe that clients were reluctant to place orders due to increased pricing and the uncertain global economy. Additionally, the increase in demand for DAA was only seen in the domestic market as new export orders fell for the eleventh consecutive month. Further, there are growing indications that the labor market is beginning to break.

As per the ChemAnalyst, the cost of DAA in the USA market hovered around USD 1852/M.T. on a FOB Texas basis during the last week of April 2023, and it is depreciated by 4.8% from the prior month.

The demand for DAA from the downstream sectors is anticipated to improve in the following weeks, which would likely lead to an increase in the DAA market.