For the Quarter Ending September 2024
North America
In Q3 2024, the North American Isophthalic Acid market experienced a sustained decline in prices, with the USA witnessing the most significant changes. The decline in the price of m-xylene, a critical feedstock in isophthalic acid manufacturing, reduced production costs.
This has allowed manufacturers to lower their selling prices to remain competitive. Prices for m-xylene fell due to dampened market sentiments and lower overseas import offers. Due to the dullness of the off-season, downstream demand for isophthalic acid, especially from PET resin and its derivative industry, has remained low. This decreased demand has pushed down the costs of both m-xylene and isophthalic acid.
The overall trend for Isophthalic Acid prices in the USA has been negative. In Q3 2024, prices decreased by 9% compared to the previous quarter, indicating a continuing downward trajectory. The second half of the quarter saw a significant -8% price difference from the first half, reflecting a pronounced decline. As the quarter concluded, Isophthalic Acid CFR Texas in the USA settled at USD 1340/MT, highlighting the prevailing decreasing sentiment in the market.
APAC
In Q3 2024, the Isophthalic Acid market in the Asia-Pacific region witnessed a significant decrease in prices, influenced by various factors. The quarter saw a 5% decrease from the previous quarter in 2024. China, in particular, experienced the most substantial price changes, reflecting a -8% difference between the first and second half of the quarter. The market faced a downturn in Q3 2024 due to several factors including excess supply, weak consumer spending, and slow demand from the downstream PET resin industry. This combination led to lower prices and negative market sentiment. Furthermore, the decline in crude oil prices and disruptions in global shipping further impacted pricing dynamics. In China, the Isophthalic Acid market faced notable fluctuations, with prices showing a downward trend. The quarter-ending price of Isophthalic Acid FOB Qingdao in China stood at USD 1140/MT, indicating a consistent decrease. Overall, the pricing environment for Isophthalic Acid in the APAC region during Q3 2024 has been characterized by negative sentiment, with prices steadily declining.
Europe
The European Isophthalic Acid market in Q3 2024 was impacted by mixed trends, primarily driven by fluctuations in the downstream PET market. Considering downstream, PET prices in Germany experienced a significant 1.1% drop in the first half of Q3. This decline was attributed to weak demand from downstream customers due to low purchasing activity and insufficient cost pressure from feedstock inputs. During this period, demand for Polyethylene Terephthalate (PET) remained limited, particularly from the downstream industries. Consumption levels for PET remained moderate to low, further influenced by the price decrease. This was further impacted by weak consumer sentiment, as confidence in Germany took a significant hit in August. Both income and economic expectations declined sharply, while willingness to spend dropped slightly. In the second half of the quarter, PET resin prices stabilized after a sharp fall in the previous weeks. This stabilization was supported by improving consumer sentiment and a minor increase in PET resin sales. Sustained low feedstock prices and consistent demand contributed to the stabilization of PET resin prices.
For the Quarter Ending June 2024
North America
Isophthalic acid prices have continued to rise in the US market during the second quarter of 2024 supported by the shortage of import supply coupled with high ocean freight rates justified sellers' hike attempts.
In addition, the feedstock m-xylene prices have increased throughout the quarter which led to the high production cost of Isophthalic acid. As a result, manufacturers in the exporting nations, China and South Korea have opted to maintain their prices at elevated levels thus same can be reflected in the import prices. At the same time, imports from the exporting market have been reduced in the US due to port congestion brought on by the adverse weather conditions in the Asian market as well as the lingering Red Sea crisis. As a result, the level of inventories was observed on the lower end in the US market, further contributing to an upward shift in the price realization of Isophthalic acid.
Though, demand for Isophthalic acid from the downstream PET resin and its derivative sector was muted as consumption from the end-user PET resin and its derivative sector has been slowed down in the domestic market. Also, downstream factories were mostly maintaining purchases tied to basic needs, showing low enthusiasm for procurements. The market’s ability to consume raw materials was limited, resulting in an overall sluggish state of demand. Despite this factor, prices of Isophthalic acid have remained buoyant in the domestic market. On the other hand, consumer prices increased less than expected in April, suggesting that inflation resumed its downward trend at the start of the second quarter in a boost to financial market expectations for a September interest rate cut.
Asia- Pacific
Prices of Isophthalic acid have continued to show an uptrend in the South Korean market during the second quarter of 2024 owing to tight supply. The feedstock m-xylene prices have increased followed by strong crude oil prices which resulted in the high production cost of Isophthalic acid, contributing to an uptrend in the price realization of Isophthalic acid in the domestic market. On the demand front, the inquiries from the downstream Polyethylene Terephthalate resin and its derivative industry have largely moderated in the domestic market as consumption from the end-user sector has been steady in the domestic market. Apart from this, South Korea's annual inflation rate in South Korea slowed to 2.9% in April 2024, from 3.1% in the previous month, alleviating the strains from the purchasing power of the end-use industries. At the same time, inquiries from the overseas market have increased in an effort to restock the inventories. According to the Ministry of Trade, Industry and Energy (MOTIE), petrochemical exports from South Korea have increased by 16.3% in April 2024, compared with the previous month. Furthermore, the supply of Isophthalic acid was relatively tight due to low operating rates and some plants have been under maintenance shutdown across the domestic market, keeping the prices elevated in the domestic market.
Europe
Throughout the second quarter of 2024, Isophthalic acid prices have remained on a soft note across the German market amid quiet buying sentiments. A muted purchase interest further lent support to a weak pricing environment. The cost support from feedstock m-xylene was limited to Isophthalic acid as its prices settled on the lower end in the domestic market, causing the prices to follow a downward trend in the domestic market. In addition, domestic operating rates have remained under pressure in the wake of economic uncertainties. Additionally, heavy rainfall and subsequent flooding in Bavaria and Baden-Wurttemberg had a minimal impact on the Isophthalic acid market, with trading activity remaining suppressed. Meanwhile, Asian imports have faced logistical challenges, including cargo delays and disruptions in the Red Sea, although expectations suggest improved flow by the second half of July. Despite this, current material availability in the domestic market has been adequate to meet weak spot and contractual demand levels which weighed down the prices of Isophthalic acid in the domestic market. On the demand front, inquiries from the downstream PET resin and its derivative industry have remained muted with limited instances of new orders reported by market players, supporting the prices to follow a downward trend. In addition, the spot market transactions were also flat amid divergent supply and demand fundamentals with market players anticipating prices to fluctuate further.
For the Quarter Ending March 2024
North America
Throughout the first quarter of 2024, Isophthalic acid prices have witnessed a bearish rally in the US market as prices decreased in the exporting market. The demand for Isophthalic acid from the downstream PET resin and its derivative industry has remained soft amid null season demand, leading to the bearish market sentiments of Isophthalic acid among the sellers of Isophthalic acid.
The market transactions were mainly based on small orders. On the other hand, according to data released by the US Bureau of Labour Statistics, the annual inflation rate in the US has edged up to 3.2% in February 2024, compared to 3.1% in January. Foreseeing the rise in inflationary pressures, the Federal Reserve has effectively ruled out the possibility of an interest rate cut before June, keeping it in the 5.25% to 5.5% range since last July. The firm inflationary pressure has further impacted the purchasing power of consumers.
Meanwhile, imports from Asia have turned cheaper as prices decreased in the exporting market amid sufficient inventories which in turn led to low imported prices of Isophthalic acid in the US market. In addition, spot prices for the China-US routes shifted direction as of mid-February. The cumulative gains were relatively smaller in China-US routes during the upswing. Hence, the slump arrived later at a slower pace. According to Freightos, the latest index for China/East Asia - North America West Coast decreased by 7% to stand at USD 4,419/FEU while the index for the East Coast was also down by 8% to USD 6,107/FEU as of March 2024. Despite this, material availability was limited as buyers were reluctant to stock the material due to tepid demand.
Asia- Pacific
Isophthalic acid prices have continued to decline in the South Korean market throughout the first quarter of 2024. The cost pressure from feedstock m-xylene was limited on Isophthalic acid as its prices settled on the lower end in the given time frame, supporting the prices to follow a downward trend in the domestic market. On the demand front, the inquiries from the downstream PET resin and its derivative industry were flat amid null season demand in the domestic market which weighed down the prices of Isophthalic acid. Most market transactions were mainly based on a need-on-demand basis. In the meantime, demand from the overseas market has also softened amid macroeconomic headwinds as well as low season demand. Furthermore, the Ministry of Trade, Industry and Energy (MOTIE), South Korea’s petrochemical exports in February dropped by 3.1% year on year to USD 3.94bn, reversing the 4.0% growth in the previous month, indicating weak demand. Furthermore, the firm inflationary pressure and high-interest rates have further eroded the purchasing power of consumers and deteriorated the market sentiments of Isophthalic acid in the domestic market. Moreover, material availability was observed on the higher end amid a decline in demand, leading to the bearish market sentiments of Isophthalic acid among the manufacturers.
Europe
Isophthalic acid prices have persistently increased across the German market during the first quarter of 2024. Tightening supply conditions were the main driver behind the price rise, even though demand from the downstream PET resin and its derivative industry has remained under pressure from economic challenges. Additionally, cost support from feedstock m-xylene was sufficient for Isophthalic acid as its prices settled on the higher end in the domestic market. These supported the prices to follow an uptrend in the domestic market. Furthermore, international crude oil prices gained as European diesel demand, constrained by Russian sanctions and shipping disruptions, pulled oil prices higher in a market jittery with US refinery output limited by planned overhauls. The strong crude oil prices have further raised the overall production cost of feedstock m-xylene in the domestic market. Moreover, the price rise was further supported by curtailed output rates and a few outages in the domestic market, leading the limited material availability in the domestic market. However, the overall demand situation could be described as mostly static, with market players having to deal with tepid end-user industry demand, contributing to the uptrend in the price realization of Isophthalic acid in the domestic market. Meanwhile, imports from the Asian market were higher amid elevated freight rates, disrupted supply chains, and firming in other major global markets. This further boosted the market sentiments of Isophthalic acid.
For the Quarter Ending December 2023
North- America
Isophthalic acid prices in the US market continued to decrease during the fourth quarter of 2023. The influence of feedstock m-xylene's cost pressure on Isophthalic acid was insufficient, as its prices settled on the lower end in the domestic market, prompting a downtrend. Simultaneously, imports from the Asian market became more economical as prices decreased in the exporting market, resulting in a reduced production cost of Isophthalic acid in the US domestic market.
Additionally, macroeconomic challenges, such as ongoing inflationary pressure and elevated interest rates, weakened the purchasing power of end-users. Although the Federal Reserve targeted a 2% annual inflation rate, achieving this goal was not anticipated for several years. Market indicators suggested that the central bank was likely concluding its rate hikes in the current cycle, even though officials had one more increase planned before the year's end.
Furthermore, demand for Isophthalic acid from the downstream PET resin and its derivative industry remained subdued due to sluggish buying trends among end-users. Market players noted that weak demand continued to put pressure on sellers, with buyers either making limited purchases when necessary or adopting a cautious stance in anticipation of potential further declines. The decline in downstream demand could be attributed to underperforming end businesses and global economic uncertainties. Meanwhile, overseas market demand also softened as buyers refrained from actively stocking up on the material, further contributing to the downward pressure on m-xylene prices.
Despite disruptions in the supply chain caused by turmoil in the Red Sea and prolonged drought in the Panama Canal, material availability remained sufficient to meet overall downstream demand, further deteriorating the prices of Isophthalic acid in the domestic market.
Asia- Pacific
Isophthalic acid prices have demonstrated a bearish trend in the South Korean market during the last quarter of 2023 reflecting challenging conditions in the nation's chemical industry. Factors such as decelerating economic growth, diminished demand, and an oversupply in the domestic market contributed to these hostile circumstances. The cost pressure from feedstock m-xylene was limited on Isophthalic acid as its prices settled on the lower end throughout the quarter of 2023. These lead to the bearish market sentiments of Isophthalic acid among the manufacturers. In addition, demand for Isophthalic acid from the downstream derivative PET industry has remained tepid with limited instances of new orders reported by market players. This supported the prices to follow a downtrend in the domestic market. Meanwhile, inquiries from the overseas market have been subdued in recent months as macroeconomic challenges continue to keep consumer spending at bay. In addition, South Korean isophthalic acid producers face difficulties in raising export prices as buyers find it difficult to stomach. China-bound shipments experienced a 9.5% drop in October, indicating weakened demand. Regarding domestic production, manufacturing firms maintained steady rates, indicating a lack of improvement in demand from the downstream industry. Additionally, South Korea's manufacturing Purchasing Manager Index slightly improved from 49.8 in October to 50.0 in November, mirroring stable operating conditions midway through the final quarter of 2023. Despite this stability, existing inventory levels were considered sufficient, prompting manufacturers to clear out their current inventories at discounted prices.
Europe
The European chemical industry faced substantial challenges due to increased tensions in the Israel-Palestine conflict, ongoing geopolitical issues involving Russia and Ukraine, and changes in the global energy market. These geopolitical events resulted in continuous fluctuations in chemical raw material prices, affecting downstream demand on a broader level. In the final quarter of 2023, the European largest economy, the German market saw a decline in Isophthalic acid prices, driven by a deepening economic downturn linked to weakened domestic demand. The demand for Isophthalic acid from the downstream PET resin and its derivative sectors has remained lackluster due to weak buying trends among the end-user sector which weighed down the prices of Isophthalic acid in the domestic market. Market participants report spot market transactions were also average, as the eagerness of terminal firms to enter the market was not strong. Additionally, macroeconomic challenges, particularly firm inflationary pressure, and high interest rates, further eroded the purchasing power of end-users. Market participants observed that the worsening demand outlook accelerated destocking activities toward the end of the quarter of 2023. In addition, the drop in feedstock m-xylene prices amid weak demand from other end-user sectors has resulted in a lower production cost for Isophthalic acid in the domestic market. Concurrently, competitively priced offers from the Asian market further depressed Isophthalic acid prices in the German domestic market. Additionally, the operating rates of the manufacturing firms have remained under pressure. Despite this material availability was abundant to cater to overall downstream demand. Furthermore, the German manufacturing Purchasing Manager Index remained in the contraction zone (i.e., below 50), indicating a contraction in industrial and production activity. Furthermore, the recent turmoil in the Red Sea had not impacted the supply of Isophthalic acid at a very broad level as there was already tepid demand and enough supply within the domestic market.
