Acetic Acid Holding Firm For Now; Methanol Crunch and Demand Revival Set Stage for Surge

Key Highlights

• Domestic Acetic Acid prices steady despite GNFC’s Ethyl Acetate price cut
• U.S. sanctions disrupt methanol imports, risking tighter supply from September
• Post-monsoon VAM and pharma demand likely to boost consumption
• GNFC & INEOS plan 600,000 tpa Acetic Acid plant in Gujarat by 2028

Acetic Acid Prices Hold Firm Despite Downstream Adjustments

Domestic Acetic Acid markets have shown notable stability this week, even as downstream prices adjust. While GNFC has reduced Ethyl Acetate prices, Acetic Acid remains unchanged—highlighting resilience in the upstream value chain.

Current Price Benchmarks (60-Day Credit Terms):

Importers:

• ₹32.50++/kg ex-Kandla
• ₹33.00++/kg ex-Mumbai

Traders:

• ₹33.00++/kg ex-Kandla
• ₹33.25++/kg ex-Mumbai

Forward contracts in Acetic Acid remain thinly traded as downstream sectors await clarity on methanol feedstock availability and pricing.

Methanol Supply Risks Emerge from U.S. Sanctions on Iranian Exporters

A key concern troubling market participants is tightening methanol supply. The recent U.S. ban on certain Iranian methanol exporters has severely disrupted supply chains for both India and China—countries heavily dependent on these imports.

This has put several methanol-dependent sectors on alert, including:

• Acetic Acid
• Acetyls
• Methyl Amines
• Sodium Methoxide

CFR China Methanol Futures (Contango Pricing):

A $6/MT increase in September contracts signals a bullish cost pass-through—potentially pushing Acetic Acid prices upward.

Supply Outlook:

• July–August: Well-balanced and sufficient
• September: Tightening expected due to escalated feedstock costs and constrained import volumes

In response, industry players especially acetyl and amine manufacturers have begun aggressive inventory building.

Demand Drivers

• Post-monsoon season (starting September) usually sees higher VAM consumption
• Pharmaceutical sector showing early signs of ramping up production, especially in bulk drug segments
• Seasonal lift in downstream demand could support methanol and Acetic Acid volumes

Acetic Acid Demand Breakdown in India (Monthly):

GNFC–INEOS Partnership Targets Long-Term Supply Chain Strength

Commodities Snapshot:

• WTI Crude Oil: +0.30% → $62.82 / barrel
• Natural Gas: −1.00% → $2.80 / MMBtu
• CFR China Methanol: $272 / MT
• FOB China Acetic Acid: $290 / MT

In a significant development, GNFC and INEOS Acetyls have announced plans for a 600,000 tpa Acetic Acid plant at GNFC’s Bharuch site in Gujarat. The project is in the planning phase, with commissioning slated for 2028. This venture aims to strengthen India’s domestic supply chain, reduce import dependency, and build forward-integrated capabilities.

Expert Insights and Market Outlook

Acetic Acid prices are expected to remain stable in the short term but may face volatility ahead.

Potential Catalysts for Price Rebound:

• Elevated methanol feedstock costs
• Rising demand from VAM and pharmaceutical sectors
• Restricted supply from geopolitical constraints

This is a strategic window for inventory building while spot prices consolidate. Smart accumulation now could hedge against price spikes and supply disruptions in the coming months.