Acetic Acid Price Correction Continues Amid Oversupply, Weak Demand, and BIS Withdrawal

Acetic Acid Market Price

• Domestic Acetic Acid prices have softened by ₹0.5/kg, now quoted at ₹31.75++/kg Ex-Kandla and ₹32.00++/kg Ex-Mumbai for advance payment terms. 
• For bulk volumes with 90-day credit applicable for July and August liftings, rates are at ₹32.50++/kg Ex-Kandla and ₹32.75++/kg Ex-Mumbai.
• Bulk buyers report that cargoes expected to arrive in the first half of August 2025 are being negotiated at ₹28.00 to ₹28.50/kg. 
• The price correction is largely driven by sluggish downstream demand, availability of cheaper substitutes, and the recent withdrawal of the BIS specification on Acetic Acid, resulting in bearish market sentiment.

Asian benchmark FOB China Acetic Acid spot prices continue to exhibit backwardation:

• 1st week of July: $315/MT
• 2nd week: $305/MT
• 3rd week: $382/MT
• 4th week: $272/MT

Notably, Acetic Acid prices in China have, for the first time, fallen below Methanol prices. 

Future contracts for CFR China Methanol show an upward trend:

• 2H July 2025: $277/MT (up $2)
• 1H August 2025: $283/MT (up $5)
• 2H August 2025: $285/MT (up $5)

Despite negative conversion margins arising from elevated Methanol feedstock prices, most Acetic Acid producers are operating at high run rates, leading to an increase in supply.

Acetic Acid Market Supply & Demand Dynamics

• Market supply remains ample, while downstream demand remains tepid, prompting continuous price adjustments. Acetyl derivatives remain the key consuming segment.
• However, most Ethyl Acetate and Acetic Anhydride units are operating at significantly curtailed rates due to negative margins.
• A healthy pipeline of vessel arrivals in August and reduced replacement costs are sustaining a bearish short-term sentiment in the market.
• Demand from bulk drug manufacturers has underperformed, with many pharmaceutical units running selective campaigns and taking a cautious stance amid ongoing concerns regarding possible US tariff changes. Mono Chloro Acetic Acid (MCAA) production has also been scaled back.
• Meanwhile, reduced VAM production in China, attributed to monsoon disruptions, has limited acetic acid consumption, contributing to a surplus across Asia. However, market participants suggest that rising Methanol prices and a potential recovery in pharma demand could shift the market dynamics.
• Additionally, the recent imposition of Anti-Dumping Duty (ADD) on Acetonitrile has spurred domestic production, offering some positive momentum for Acetic Acid consumption.
• India's estimated monthly Acetic Acid demand stands at approximately 165 kt, with the following sectoral distribution:
  1. PTA Manufacturers: 52 kt/month
  2. Ethyl Acetate: 35 kt/month
  3. Acetic Anhydride: 29 kt/month
  4. Bulk Drugs, Specialty Chemicals & Dyestuffs: 25 kt/month
  5. Mono Chloro Acetic Acid: 11 kt/month
  6. Acetonitrile: 5 kt/month
  7. Diketene & Derivatives: 3 kt/month
  8. N-Propyl & Butyl Acetate: 2 kt/month
  9. Other Downstream Uses (reagents, food, beverage, etc.): 2 kt/month

Acetic Acid Market News

• Internationally, upstream prices rose by $66.27/MT (up 0.39%), while natural gas prices increased 1.09% to $3.12/MMBtu.
• CFR China Methanol: $280/MT
• FOB China Acetic Acid: $272/MT

Expert Opinion

Experts projects that Acetic Acid prices are likely to remain under pressure this week, amid oversupply and weak downstream demand. Nonetheless, the continued rise in Methanol feedstock prices is expected to intensify cost pressures on producers. 

Should pharmaceutical demand revive, a swift price reversal could occur. Buyers are advised to monitor inventories closely and consider restocking at current price levels.