Acetic Acid Prices Firm Up as downstream Manufacturers Recover from Flood-Induced Shutdowns

Chemical Price

• Importers raised Acetic Acid prices today by ₹0.50/kg, bringing the rate to ₹36.50++ per kg ex-Mumbai on an advance payment basis for end users. Traders are quoting prices at ₹37.00++ per kg ex-Mumbai under similar payment terms.
• In Kandla, Acetic Acid offers stand at ₹35.50++ per kg on an advance payment basis, while rates for 60-day credit terms are pegged at ₹36.50++ per kg.
• Bulk transactions were recorded in the range of ₹37.00++ per kg ex-Mumbai and ₹36.50++ per kg ex-Kandla, both on 60-day credit terms.
• The price hike is largely attributed to a resurgence in demand, following the restart of operations by most manufacturers in Gujarat and the southern regions, which had been impacted by recent floods.

Chemical Demand and Supply

• Demand for Acetic Acid remains strong, supported by healthy downstream consumption. Many packaging, inks, and pharmaceutical producers in Andhra Pradesh and Gujarat are now operating at full capacity.
• However, the Maharashtra market is currently subdued due to the ongoing Ganesh Chaturthi holidays. Traders expect activity to pick up next week, post-holidays.
• In addition, production output from key Ethyl Acetate manufacturers has seen an uptick this week, further boosting Acetic Acid demand, which is expected to rise notably in the coming weeks of September 2024.
• Demand from the amines and bulk drugs sectors remained robust in August, with market participants maintaining a positive outlook for September.
• While supply is adequate, driven by steady vessel arrivals, significant drawdowns are expected this week. Traders and bulk buyers are cautiously building inventory, which is seen as a positive indicator for the market.
• Market participants are closely monitoring the Asian benchmark FOB China.
• A minor rise in these prices could uplift market sentiment, according to a leading importer. As such, a short-term recovery in Acetic Acid prices is seen as likely, with the potential for a shift in market dynamics due to a surge in spot prices.
• India's monthly demand for Acetic Acid is around 125 Kt, with key sectors like Ethyl Acetate, MCA, and Acetic Anhydride accounting for nearly 65% of total consumption. For the fiscal year 2024-25, Acetic Acid demand in India is projected to grow by 5.5%, supported by a favourable market outlook.
• Accord Organics Pvt Ltd, an Ethyl Acetate producer based in Western India, has significantly expanded its production capacity, emerging as a key player in driving the growth of domestic Acetic Acid demand.

Chemical News

• On the global front, upstream crude oil benchmark WTI saw a 1.17% increase, reaching $68.46 per barrel.
• Natural gas prices fell by 3.46%, standing at $2.19/MMBtu.
• FOB China Acetic Acid prices remained steady at $365/MT.

Expert Opinion

• Acetic Acid prices are likely to remain volatile this week, as downstream manufacturers in Gujarat and Andhra Pradesh resume operations post-floods. A price rebound is anticipated, and buyers are advised to take advantage of inventory-building opportunities.