For the Quarter Ending September 2024
North America
The North American Mineral Turpentine Oil (MTO) market faced a bearish situation during the quarter, largely driven by a 13% decline in crude oil prices. Despite this price drop, MTO production in the US remained low due to reduced refinery rates. According to data from the EIA, average refinery run rates decreased from 92.7% in July to 92.2% in August, and further to 90.8% in September 2024, as the ongoing hurricane season prompted cautious operational measures across US refineries. Some facilities even declared force majeure due to damage from Hurricanes Beryl and Francine, further contributing to the low production levels of MTO.
Demand conditions from the downstream paints and coatings industries were unfavourable, impacted by seasonal factors and high mortgage rates that dampened homebuying prospects. As the quarter progressed, uncertainty loomed over the market due to upcoming elections, leading to suppliers receiving only small quantities of orders.
This combination of low production, weak demand, and market uncertainty created a challenging environment for the Mineral Turpentine Oil market in North America.
APAC
The Asian Mineral Turpentine Oil (MTO) market experienced notable fluctuations during the third quarter of 2024. Overall, MTO prices remained stable, exhibiting a variation of approximately 0.8%. In the opening month of the quarter, reduced production amidst higher consumption drove a bullish market, with active restocking ahead of the festive season contributing to rising prices. However, the market soon shifted to a bearish trend as production costs decreased, largely due to a 13.5% decline in crude oil prices, which lowered MTO production costs. Additionally, several refineries that underwent maintenance in the earlier part of the quarter returned to production, improving domestic supply levels. This bearish market situation was further exacerbated by the underwhelming performance of the downstream construction industry, particularly during the monsoon season, which dampened demand prospects. Even after the monsoon season, recovery was reported as sluggish, continuing to exert downward pressure on the MTO market. As a result, the combination of increased supply and weakened demand contributed to a more challenging market environment for Mineral Turpentine Oil across the region.
Europe
The European Mineral Turpentine Oil (MTO) market experienced a bearish trend throughout the quarter, primarily driven by unfavourable demand conditions from the downstream construction sector and a 13% depreciation in crude oil prices, which eased production costs. Despite this, MTO supplies across Europe remained moderate due to several refineries undergoing maintenance turnarounds, limiting production capacity. Major firms conducted strategic reviews of their assets, leading to refinery closures and a subsequent reduction in domestic supplies. Additionally, strikes in Germany and various other regions threatened export conditions, compounded by the worsening crisis in the Red Sea, which resulted in inventory accumulation at ports and further pressured prices downward. The ongoing downturn in the construction sector persisted, with investment sentiments remaining historically low, leading to a lack of incoming work for European contractors. Consequently, many suppliers opted to destock construction materials in response to deteriorating demand conditions. Overall, these factors created a challenging environment for the MTO market in Europe, characterized by reduced production, weakened demand, and declining prices.
For the Quarter Ending June 2024
North America
The second quarter of 2024 has stabilized in the Mineral Turpentine Oil (MTO) market in North America, marked by a mixed trend in prices during this quarter. The decline in MTO prices in May 2024 has been influenced by several significant factors, primarily the reduction in crude oil costs and oversupply conditions. The depreciation in the prices of upstream has notably eased production costs, contributing to lower MTO prices. Furthermore, an oversupplied market condition, driven by excess inventories and high stockpiles of MTO, exacerbated the price decline.
Turning to June 2024, the end of the second quarter witnessed prices of MTO increase by approximately 2.6% due to heightened production costs and cautious operations across the US Gulf Coast and Louisiana despite demand conditions being largely unfavorable from the downstream construction market. The increment in the prices is further attributed to lengthened delivery times and higher transportation costs which further pushed the prices of MTO on the higher end. Higher mortgage rates are expected to further cast a negative sentiment for the transactions in the downstream construction industry keeping overall demand conditions moderate. The procurement activities from the industrial application remained positive for the time being.
The correlation between reduced upstream prices and slow downstream demand was evidence of stability in the MTO prices. Disruptions such as issues with maritime transportation and highway insecurity further complicated the supply chain, adding to the tightening of supplies in the US MTO market.
APAC
The second quarter of 2024 witnessed a notable depreciation in the prices of Mineral Turpentine Oil (MTO) across the APAC region. This quarter was characterized by a culmination of various factors that collectively influenced market prices. Foremost among these was the substantial reduction in feedstock Crude Oil prices, which saw a depreciation of approximately 7% globally. This reduction in production costs, however, did not translate directly into lower MTO prices due to pressures from downstream activities, particularly in construction and exports of petroleum products. Additionally, the market grappled with moderate inventory levels and a relatively softer turnaround in manufacturing activities, further squeezing profit margins. In India, the price dynamics of MTO saw the most significant price fluctuations, driven by a combination of strong demand from the downstream paints and coating industry and infrastructural development activities during May 2024. Despite the positive demand, India's MTO pricing environment was predominantly bearish due to an oversupplied market. The production disruptions due to extreme heat waves and reduced working hours exacerbated the supply situation. Overall, the price trend for MTO in India reflected a declining sentiment. The quarter concluded with the price of MTO at USD 988/KL, Ex-Mumbai, signaling a negative pricing environment. No specific plant shutdowns were reported during this quarter, but the cumulative effect of the aforementioned factors led to a challenging pricing scenario for MTO in the APAC region, particularly in India.
Europe
In the second quarter of 2024, the European Mineral Turpentine Oil (MTO) market experienced significant price decreases due to several adverse factors. This period saw declining crude oil prices, which lowered production costs for MTO. Additionally, the market faced an oversupply from the influx of inexpensive imports from neighboring regions. Despite moderate demand from the downstream construction sector, the overall pricing environment remained negative as supply consistently exceeded demand. Seasonal rainy weather further reduced construction activities, impacting MTO demand. In Germany, the MTO market was particularly strained, with a marked decline in downstream demand. The country experienced a sharp contraction in the construction sector for the second consecutive month, exacerbated by logistical challenges due to severe flooding, further hindering market circulation. Consequently, the German market saw the most substantial price changes within the region. The overall trend reflected a consistent downward trajectory, heavily influenced by both excess supply and weakened demand conditions.
For the Quarter Ending March 2024
North America
The North American MTO market experienced a largely bullish market situation during the opening quarter of 2024. The downstream construction sector across the United States witnessed a healthy performance as indicated by the number of house completions, heightened commercial construction activities and real estate developers being more active during the months of February and March 2024, except in the month of January 2024.
The initial month of this quarter witnessed a slowdown in the construction sector due to challenging weather conditions which led to limitations in logistics and transportation. The month of January usually witnessed a slowdown in the demand from the downstream paints and coating industries, stemming from subdued construction activities across North America due to the prevailing winter season.
In terms of production costs, prices of MTO across the US market continued to receive cost support from increasing prices of feedstock Crude Oil, which have appreciated by approximately 10% during the opening quarter of 2024, due to mounting geopolitical tensions across the Red Sea.
Asia
The initial quarter of 2024 has posed challenges for Mineral Turpentine Oil (MTO) in the APAC region, with prices experiencing notable fluctuations influenced by various factors. Particularly in India, the region's largest market, significant price changes have been evident, reflecting broader trends. Across Asia, the MTO market has been characterized by bearish sentiment, with prices declining by approximately 3% compared to the previous quarter. This downturn can be attributed to diminished demand from the paint and coating industry, exacerbated by a slowdown in the construction sector during the peak winter season. The post-festive season lull has further contributed to reduced demand, resulting in ample supplies and surplus inventories. Additionally, the expansion of manufacturing activities in India has exacerbated the oversupply situation. Despite improvements in weather conditions, demand from downstream industries, particularly the textile sector, has remained modest. Consequently, the pricing environment for MTO in the APAC region, particularly in India, has been negative in the first quarter of 2024, marked by low demand from the paint and coating industry and an oversupply scenario leading to price declines.
Europe
Throughout the opening quarter of 2024, prices of Mineral Turpentine Oil (MTO) in the European market displayed volatility, despite a notable increase in the prices of crude oil, rising by approximately 10% during this period. Initially, MTO prices faced a bearish market situation due to subdued performance in the construction sector. However, as the quarter progressed, the heightened prices of crude oil, driven by geopolitical tensions, eventually led to an increase in MTO prices. Despite this, demand conditions for MTO from downstream paints and coating industries remained unfavorable, reflecting the subdued construction sector. Across Europe, the construction industry continued to experience retrenchment for the fifteenth consecutive month, evident in declining permits and construction projects. Real estate firms maintained a pessimistic outlook for the year, with historically negative investment sentiments observed across all segments of the construction sector, including residential, commercial building, and civil engineering activities. The European MTO market received some support from improvements observed in the British market, where the construction sector approached stabilization, offering some demand support for downstream paints and coating industries. Additionally, secondary demand emerged from the downstream textile industry, as transactions increased due to changing weather conditions.
For the Quarter Ending December 2023
North America
In the initial two months of the 4th quarter, Mineral Turpentine Oil prices experienced a predominant bearish trend, marked by a poor performance in demand from the textile and construction industries.
The commencement of the quarter witnessed a rise in mortgage rates in the United States, reaching approximately 8% for a 30-year fixed term and over 7% for a 15-year fixed term. This increase contributed to subdued demand in the paints and coating sector of the construction industry. High-interest rates led to a notable slowdown in construction activities, primarily affecting the waning demand from the housing sector. However, there was still existing demand, notably from the importing Mexican market, where the construction industry continued to thrive.
The Mexican construction industry witnessed job creation for the eighth consecutive month, sustaining positive business sentiments for the ninth consecutive month. In the last month of the fourth quarter, prices saw an increment due to the peak festive season and declining mortgage rates. This improvement stimulated renovation activities and boosted purchasing sentiments in the downstream textile industry.
APAC
In the APAC region, Mineral Turpentine Oil prices underwent a significant bullish surge, recording an approximate 20% increase in the initial two months of the last quarter of 2023. However, by December 2023, prices experienced a depreciation of approximately 5%. The primary factor behind this price fluctuation was the surge in festive demand, compelling widespread renovation activities and exerting substantial pressure on the downstream textile industry. Positive festive sentiments generated heightened demand in the downstream paints and coating industry, surpassing the capacity of existing supplies. Moreover, frequent rains in the Ex-Works locations across Southeast Asia contributed to extensive supply disruptions, hindering product circulation. As anticipated, in December 2023, suppliers conducted destocking activities due to the market's post-festive season sluggishness. This trend was further accentuated by improved weather conditions, leading to the sale of excessive inventories at negotiable prices to accommodate fresh orders. The assessed prices of Mineral Turpentine Oil stood at USD 1032/KL in the Indian market during December 2023.
North America
In the initial two months of the 4th quarter, Mineral Turpentine Oil prices experienced a predominant bearish trend, marked by a poor performance in demand from the textile and construction industries. The commencement of the quarter witnessed a rise in mortgage rates in the United States, reaching approximately 8% for a 30-year fixed term and over 7% for a 15-year fixed term. This increase contributed to subdued demand in the paints and coating sector of the construction industry. High-interest rates led to a notable slowdown in construction activities, primarily affecting the waning demand from the housing sector. However, there was still existing demand, notably from the importing Mexican market, where the construction industry continued to thrive. The Mexican construction industry witnessed job creation for the eighth consecutive month, sustaining positive business sentiments for the ninth consecutive month. In the last month of the fourth quarter, prices saw an increment due to the peak festive season and declining mortgage rates. This improvement stimulated renovation activities and boosted purchasing sentiments in the downstream textile industry.
Europe
The European market situation for Mineral Turpentine Oil predominantly displayed a bearish trend. Demand from the paints and coating industry within the construction sector experienced retrenchment, aligning with a decline in construction activities. The diminished influx of fresh work orders and declining permits resulted in job shedding and inventory pushbacks, alleviating pressure on the downstream paints and coating sectors. Demand conditions within the construction sector were highly unfavorable, bordering on recessionary, prevailing across the European market. Real estate firms noted the ease of subcontractors for the seventh consecutive month. All three sectors of the construction industry within the Eurozone witnessed contractions, with housebuilding emerging as the weakest performing sector. Civil engineering and commercial building activities also saw significant contractions in the fourth quarter. Despite a robust demand recorded from the secondary textile industry during the peak winter season, it did not effectively ameliorate the market situation of Mineral Turpentine Oil. Additionally, energy prices were a threat to the European market, which came out to be stable throughout this timeframe, however, producer anticipated an incline in coming quarter.
