Weaker Construction Spending Results Falling Butyl Acetate Prices in the USA

Butyl Acetate prices have fallen in US during the timeframe of June to mid-August, largely due to a drop in feedstock acetic acid prices. This decrease follows the resumption of normal operations at Celanese's plants, which had previously been affected by force majeure. The return to normalcy and the easing of feedstock Acetic Acid inventory constraints have contributed to this price adjustment. Celanese Corporation reported a 4% increase in volumes compared to the previous quarter, although prices decreased by 2%. The increased production of acetic acid has also led to an ease in Vinyl Acetate Monomer (VAM) output, with the ample supply of acetic acid balancing the increased downstream VAM production.

Celanese's lifting of force majeure marks a return to normal operations yet demand from the Butyl Acetate downstream paints and coatings industry remains subdued, largely due to decreased construction spending. While the public sector shows relative strength, private and non-residential construction sectors have weakened. The rebound in Butyl Acetate downstream construction employment in August, following declines in June and July, may drive higher demand in the Butyl Acetate downstream paints and coatings industries in the coming months. Despite a year-over-year increase in construction spending in the U.S., Hurricane Beryl's disruption of Gulf Coast construction in early July contributed to weak spending data for that month. The cumulative effect of high interest rates is seen as a more significant factor, particularly for non-residential spending in the private sector, which fell by 0.4% for the month and increased by just 4.5% over the past year.

Domestic production of Butyl Acetate has remained steady, with facilities operating at optimal capacity. Butyl Acetate Market supply is sufficient to meet the subdued demand from the paints and coatings sector. Butyl Acetate Feedstock prices for acetic acid have decreased due to Celanese's plant reopening, which has alleviated previous supply shortages and led to increased Butyl Acetate market inventories. The PMI value remains low, reflecting high supply trends and weaker demand from the downstream sector. Demand from the Butyl Acetate downstream paints and coatings industry remains low, with decreased construction spending in the U.S. Non-residential construction spending decreased by 0.2% in July, while overall construction spending was estimated at a seasonally adjusted annual rate of $2,162.7 billion, down 0.3% from June but up 6.7% year-over-year. For the first seven months of the year, total construction spending reached $1,237.5 billion, an 8.8% increase compared to the same period in 2023.