Acetyl Market Struggles Amid Rising Ethanol Costs & Surging Ethyl Acetate Deman

Key Highlights:

1. Price Surge: Accordd Organics raised Ethyl Acetate prices to ₹65++ per kg (Ex-Ahmednagar) due to rising ethanol and feedstock costs.
2. Supply Constraints: Manufacturers are cutting production rates as soaring ethanol prices impact conversion economics.
3. Rising Demand: Paint and coatings industries are increasing Ethyl Acetate usage, replacing Acetone.
4. Market Volatility: Crude oil and natural gas prices remain high, contributing to ongoing cost pressures.

Ethyl Acetate Prices Surge Amid Rising Feedstock Costs

• Accordd Organics Pvt Ltd, a leading domestic player in India, has raised its Ethyl Acetate prices today by ₹0.5/kg, bringing them to ₹65++ per kg (Ex-Ahmednagar) on advance payment terms. 
• This sudden price increase is primarily driven by rising feedstock costs. Ethanol futures have surged nearly 7% since the last week of January 2025, adding further pressure on production costs.
• Additionally, the sharp increase in upstream natural gas prices and higher methanol costs are expected to keep Acetic Acid prices highly volatile.
• Bulk buyers are actively building inventories in anticipation of a further surge in Acetyl prices. On a week-on-week basis, Ethyl Acetate prices have risen by ₹1/kg.

Supply Disruptions as Manufacturers Reduce Production

• In the second half of January 2025, Ethyl Acetate prices saw some corrections due to a decline in Acetic Acid prices. However, the trend is shifting in February, as Ethyl Acetate manufacturers have started reducing production rates owing to conversion losses. 
• Market participants anticipate that the continued rise in Ethanol prices could put significant pressure on the Acetyl chain, potentially triggering a sharp price increase.
• Acetic Acid prices declined by nearly 4% during the Lunar New Year holidays in the first and second weeks of February 2025, primarily due to weak downstream demand. Furthermore, a slowdown in bulk drug production contributed to a bearish outlook for Acetyls in early February.
• Acetyl and Amine manufacturers are currently operating at lower production rates due to soaring Ethanol prices. Ethanol and Acetic Acid are the primary feedstocks for Ethyl Acetate. The estimated demand for Ethyl Acetate in India, which stood at 40 kt in 2024, is now projected to reach 44 kt, driven by robust expansion in the printing inks and packaging sectors.
• The rise in Acetone prices has also prompted paint and coatings manufacturers to shift to Ethyl Acetate as an alternative feedstock, further boosting demand due to this arbitrage opportunity.

Global Market Trends & Feedstock Price Movements

• In international market developments, crude oil benchmark WTI prices have edged up by 0.1% to $71.44 per barrel, while natural gas prices have increased by 0.08% to $3.58/MMBtu.
• Feedstock prices have also shown an upward trend: FOB China Acetic Acid prices have risen by $5 to $360/MT, and US FOB Ethanol prices have climbed by 1.66% to $1.84 per gallon.

Expert Outlook: What to Expect in the Coming Months

• It is anticipated that Ethyl Acetate prices will remain volatile, with a potential surge driven by rising feedstock costs and reduced production rates by domestic manufacturers. 
• Additionally, seasonal demand from the paints, coatings, and ink industries is expected to keep Ethyl Acetate trade active until June 2025. Buyers are advised to explore inventory opportunities before prices escalate further.