For the Quarter Ending September 2024
North America
In Q3 2024, the North American Diacetone Alcohol (DAA) market exhibited stable pricing, despite facing several market challenges. The primary factor contributing to this stability was the equilibrium between supply and demand. Although demand from key downstream sectors, particularly paints, coatings, and adhesives, experienced some fluctuations during the quarter, overall consumption levels remained steady, preventing any major price shifts.
On the supply side, consistent production rates from manufacturing facilities helped ensure an adequate and uninterrupted flow of DAA into the market. This stable supply situation counterbalanced the periodic dips in demand, fostering a relatively balanced market environment. Additionally, despite some upward pressures from fluctuating raw material costs and logistical challenges, such as transportation delays and rising freight charges, these factors did not significantly impact the overall pricing landscape.
As the quarter drew to a close, the price of Diacetone Alcohol remained steady at USD 2266/MT DEL Louisiana in the USA. This stability underscores the market's resilience and ability to maintain balance between supply and demand, positioning DAA pricing within a stable and predictable range throughout the third quarter of 2024.
APAC
In Q3 2024, the Diacetone Alcohol (DAA) market in the APAC region experienced a notable decline in prices, driven by a combination of economic and environmental factors. A primary contributor to this downward trend was the consistent drop in feedstock prices, which reduced production costs across the region. Additionally, sluggish production rates further compounded the pricing pressure, as manufacturers adjusted output in response to lower demand from key downstream industries like automotive and construction. China, being the most affected region, saw a significant impact on DAA prices. The construction sector, a major consumer of DAA, was notably subdued due to unfavorable weather conditions, including typhoons that disrupted building activities and hampered demand. This further contributed to a buildup of inventories, adding to the existing oversupply in the market. As a result of these factors, the price of Diacetone Alcohol in China dropped throughout the quarter, ending at USD 1500/MT FOB-Shanghai. This decline reflects the overall weak market sentiment, characterized by a supply-demand imbalance and broader macroeconomic challenges affecting the APAC region during Q3 2024.
Europe
In Q3 2024, European Diacetone Alcohol (DAA) prices experienced a decline, primarily driven by subdued demand and ample inventories. Both domestically produced and imported DAA were readily available, creating an oversupply in the market, which exerted significant downward pressure on prices. Key downstream industries, such as paints, coatings, and construction, exhibited lower-than-expected consumption levels, further compounding the market imbalance. As the quarter drew to a close, broader economic indicators reflected a mixed picture. The European Commission’s Economic Sentiment Indicator (ESI) remained relatively stable at 96.7 points in the EU, while dipping slightly by 0.3 points in the eurozone, reaching 96.2 points. Despite the overall decline in DAA prices, the steadiness of the ESI suggests improved confidence within the construction sector and among consumers, hinting at a potential recovery in demand moving forward. However, this optimism was not yet strong enough to offset the impact of weak industrial demand on DAA prices during Q3. By the end of the quarter, the downward pricing trend remained a key feature of the European DAA market, with the supply-demand disparity continuing to define the market landscape.
For the Quarter Ending June 2024
North America
The second quarter of 2024 has been marked by a significant upward trend in DAA prices in the North American market. Key factors driving this price surge include heightened production costs stemming from increased feedstock prices, notably Acetone. The market also faced supply constraints, influenced by moderate to low manufacturing rates and intermittent labour shortages, which exacerbated the disparity between demand and supply. Additionally, robust performance in essential downstream sectors, particularly paints and coatings, has sustained the demand pressure on DAA prices.
In the construction sector, demand for DAA was buoyed by robust performance as the Spring buying season commenced. With the onset of spring, construction projects across the country experienced a significant increase in activity. These projects, including rural highway repaving, freeway-style interchange construction, and safety enhancements, aimed to address infrastructure needs and accommodate growing transportation demands. This construction surge reflected efforts to meet increasing demands, maintain existing infrastructure, and expand transportation networks to support various modes of transportation.
Additionally, there was a positive signal in the hospitality sector, with the volume of hotel rooms under construction growing year-over-year for the first time since June 2023, indicating a gradual recovery. These combined factors have driven up the demand for DAA, a crucial ingredient for construction paints and coatings. The quarter concluded with DAA prices pegged at USD 2206/MT for Diacetone Alcohol DEL Louisiana, USA.
APAC
The second quarter of 2024 for the Diacetone Alcohol (DAA) market in the APAC region has largely been characterized by price stability. This equilibrium was driven by a balance between supply and demand dynamics, with adequate inventories meeting moderate to low consumer interest. Contributing factors to this steadiness included unchanged feedstock Acetone prices, consistent production rates, and a muted performance from downstream sectors such as paints, coatings, and construction. Seasonality played a minimal role, as the expected uptick in construction activity during the peak summer months did not materialize substantially, primarily due to economic uncertainties and market speculations. In China, the market experienced the greatest price fluctuations within the region. The overall trend for DAA prices in China was one of stability, underpinned by a steady supply from resumed operations at key Acetone production facilities. The quarter-ending price for DAA in China stood at USD 1517/MT FOB-Shanghai. Despite the overall negative percentage changes, the pricing environment throughout the quarter remained predominantly stable, suggesting that market adjustments were both predictable and manageable.
Europe
In the second quarter of 2024, the Diacetone Alcohol (DAA) market in Europe faced a challenging environment, characterized by a consistent downward trend in prices. Several key factors contributed to this decline, notably the subdued demand from major end-user sectors such as construction and automotive. The construction industry experienced a downturn, largely due to a combination of economic and geopolitical uncertainties. High financing costs and unfavorable weather conditions further exacerbated the situation, leading to a reduction in demand for DAA, an essential component in construction-related paints and coatings. As a result, the decreased activity in the construction sector significantly impacted the consumption of DAA. Similarly, the automotive sector witnessed a decline, particularly in the sales of electric vehicles (EVs) and passenger cars. This slump was partly due to the withdrawal of government incentives for battery-powered electric vehicles, which resulted in a noticeable decrease in new registrations. The reduction in demand for DAA, crucial for the production of automotive coatings and other related products, added to the challenges faced by the DAA market. Overall, these factors collectively contributed to the persistent downward pressure on DAA prices in Europe during the second quarter of 2024. The market continues to navigate these challenges amid a complex and evolving economic landscape.
For the Quarter Ending March 2024
North America
During the opening quarter of 2024, the North American DAA market saw significant bullish trends. Prices of DAA rose by around 3% across the region during this period. The primary reason for this modest increase was the lack of cost support from the Acetone feedstock, which experienced a decrease of over 10%, thereby lowering production costs.
This occurred alongside a robust performance in the construction sector, with notable indicators such as increased house completions, heightened commercial construction activities, and heightened involvement from real estate developers, particularly in February and March 2024, although January saw a slowdown due to adverse weather conditions impacting logistics and transportation. While January typically witnesses reduced demand from downstream paints and coating industries due to subdued construction activities in North America during the winter season, this period saw Acetone prices rising by approximately 5%, providing support to the North American DAA market.
However, in February and March 2024, the market received demand-side support as weather conditions gradually improved, bolstering the construction sector. Additionally, stability in mortgage rates during these months positively influenced transaction activities in the construction sector, particularly with the onset of the spring homebuying season.
Asia
Throughout the first quarter of 2024, Diacetone Alcohol (DAA) prices in the APAC region have consistently declined. Various factors have contributed to this trend. Generally, there has been subdued demand from the downstream paints and coatings industry, particularly within the construction sector. The sluggish recovery of construction, evident in declining house prices and limited restocking activity, has further dampened the demand for DAA. Moreover, the lackluster performance of importing markets like South Korea and Japan has added to the overall weak international demand for DAA. China has experienced the most significant price fluctuations for DAA in the APAC region, characterized by a bearish market situation marked by ample supplies and tepid demand from the construction sector. Despite stable prices of the key feedstock Acetone, which influences DAA production costs, DAA prices have continued to decrease in China. The post-Chinese Lunar New Year lull has led to a slowdown in renovation activities and a lack of restocking momentum. The financial troubles of major real estate firms like Evergrande have also negatively impacted demand for DAA from the paints and coatings industry. Overall, DAA prices have depreciated by more than 11% during the opening quarter of 2024 when comparing prices from December 2023 to the end of March 2024.
Europe
The European DAA market witnessed a bullish market situation during the first quarter of 2024 due to receival of support from the prices of feedstock Acetone. Prices of Acetone surged by approximately 20% consequently increasing the production costs of DAA. Overall, the construction sector across the Eurozone witnessed moderate improvements across Germany, but the demand conditions were not positive. Improvements in the construction sector were witnessed across the UK, Belgium, and the Netherlands, providing some support to the prices of DAA across Europe. However, demand conditions continued to remain subdued as the construction sector continued to remain mired retrenchment throughout the first quarter. This is largely indicated by declining permits and construction projects. Overall real estate firms remained downbeat with outlook conditions being largely pessimistic for this year and investment sentiments remained historically negative with contractions witnessed in all segments of the construction sector, namely residential, commercial building, and civil engineering activities. Moreover, challenging conditions in the supply system also resulted from the strikes held by the Union Worker, leading to limitations in logistics and transportation costs.
For the Quarter Ending December 2023
North America
Diacetone Alcohol (DAA) prices in the North American market exhibited an initial increase of approximately 8% during the first two months of the fourth quarter, followed by stability in December 2023.
Demand conditions within the Diacetone Alcohol market remained largely subdued, mirroring the moderate performance of the construction sector. In the United States, the DAA market continued to be influenced by escalating production costs, driven by a notable increase of more than 50% in feedstock Acetone prices throughout the fourth quarter.
Regarding demand dynamics, the primary demand from the paint and coating sector within the construction industry remained subdued, despite the automotive sector displaying robust demand, evidenced by a 13% increase in automotive sales. Demand from the importing Mexican market also remained healthy, as the construction industry in Mexico sustained positive performance, with expectations of increased nearshoring activities in 2024.
The overall assessment placed the prices of Diacetone Alcohol at USD 2150/MT DEL Texas toward the conclusion of the last quarter of 2023.
APAC
During the fourth quarter of 2023, the Diacetone Alcohol (DAA) market in China experienced a bullish trend in the Asia-Pacific region, with prices indicating an 8% incline. Despite the construction sector's moderate performance during this period, the demand for DAA from the paint and coating industry was notably subdued. This was attributed to major Chinese real estate entities seeking protection against bankruptcies. The rise in DAA prices can be primarily attributed to the robust performance of the automotive sector, which exerted pressure on the downstream paint and coating industry. Additionally, fluctuations in Acetone prices, with varying availability among traders, contributed to fluctuating production costs. Although the downstream paint and coating industry in China showed a slight increase in procurement activities in November 2023, leading to heightened purchasing, the overall market dynamics may shift due to year-end offer sales and destocking activities by merchants. Despite a decline in raw material costs, the cost of DAA remained high, reflecting increased purchasing activities. As of the end of the current quarter, the latest price of DAA FOB-Shanghai in China is USD 1782/MT. Notably, there were no reported plant shutdowns during the quarter that significantly impacted the market. The percentage change in price from the same quarter of the previous year was 11%, and there was a 15% increase in price from the previous quarter. However, there was no significant percentage comparison between the first and second halves of the quarter.
Europe
The European market for Diacetone Alcohol (DAA) witnessed a sustained upward trajectory, primarily fueled by the escalating prices of feedstock Acetone, which experienced a nearly 10% surge across the region. Despite a challenging landscape marked by a struggling construction sector, indicated by diminishing housing permits and persistently pessimistic investment sentiments, the demand from the paints and coating industry, particularly within the construction and automotive sectors, remained subdued. Notably, the automotive industry faced a downturn, with sales continuing to decline throughout December 2023. However, a semblance of stability emerged through consistent demand from the printing sector, particularly in the ink industry, and the electronics industry. These sectors provided a bolstering effect on the overall DAA market, counteracting the prevailing challenges in other segments. The overarching market dynamics of DAA were significantly influenced by the persistent elevation in feedstock Acetone prices. The notable increase in upstream Benzene prices further escalated production costs, contributing to the overall rise in DAA prices. Despite the stable demand observed in the printing and electronics sectors, the continuous ascent in production costs remained the primary driver behind the upward trajectory of DAA prices.
