FOB China Stable; India's Acetic Acid Market caught between soft demand and Supply Worries

Key Highlights

1. Bulk import prices dropped to ₹36/kg (ex-Kandla) amid weak demand and lower costs.
2. FOB China Acetic Acid stable at $308/MT; limited global price movement. 
3. Supply disruptions loom as multiple Indian plants announce shutdowns in May. 
4. Bulk drug sector demand improves; MCAA and Butyl Acetate drive incremental consumption.

Chemical Price Snapshot: Domestic & Global Benchmarks

• Bulk importers have marginally reduced Acetic Acid prices by ₹1/kg for large-volume deals, now quoting at ₹36/kg (ex-Kandla) and ₹36.50/kg (ex-Mumbai) under 60-day credit terms.
• However, trader quotations remained firmer, offering material at ₹36.50/kg ex-Kandla and ex-Mumbai on advance payment terms.
• Despite tight port inventories, domestic Acetic Acid prices declined by approximately ₹3/kg on a week-on-week basis, attributed to sluggish offtake and a drop in replacement costs.
• Bulk consumers have started building inventories, driven by concerns over potential vessel disruptions amid the ongoing geopolitical tensions in the region.

International Benchmarks

• Asian benchmark FOB China prices for Acetic Acid remained steady at RMB 2,650/MT, equivalent to $308/MT after deducting VAT and ARC discount.
• A leading Indian importer commented that the current bullishness in downstream Ethyl Acetate and Acetic Anhydride markets may provide upward support to Acetic Acid prices in the near term.

Chemical Supply & Demand Dynamics: Turnarounds & Demand Shifts

• Supply tightness continued in April 2024 due to reduced vessel arrivals. Further constraints are expected as one of India’s major PTA producers has announced a maintenance turnaround, while acetyls major Laxmi Organics is scheduled to shut down operations for annual maintenance from 14th May 2025 for a three-week period.
• In contrast, demand from the bulk drug sector witnessed a notable uptick in May 2025, with most key manufacturers increasing production rates.
• On the other hand, consumption from major downstream segments like Ethyl Acetate and Acetic Anhydride remained muted as many plants were operating at reduced capacities. PTA manufacturers too declared maintenance shutdowns in the first week of May.
• Interestingly, demand from the Mono Chloro Acetic Acid (MCAA) sector has risen, supported by the resumption of operations by Grasim Industries on the East Coast.
• A structural demand shift is underway as India, which previously imported 100% of its Butyl Acetate requirements during 2023–2025, has begun local production. 
• Accordd Organics Pvt Ltd has emerged as the largest domestic Butyl Acetate manufacturer, contributing to incremental Acetic Acid demand.
• India’s total Acetic Acid demand is estimated at 165,000 tonnes/month, while domestic producer GNFC supplies approximately 12,500 tonnes/month.
• "Overall demand remains weak but is balanced by low port inventories," noted a market participant.
• The price spread between domestic Methanol and Acetic Acid has improved significantly, as Methanol prices dropped sharply due to increased arrivals of Iranian cargoes.

Chemical Market Updates: Energy & Feedstock Prices

• In the international energy markets:
  A. WTI crude oil prices rose 0.93% to $61.58/barrel
  B. Natural gas prices dipped 1.61% to $3.73/MMBtu
• Feedstock market updates:
  A. CFR China Methanol stood at $264/MT
  B. FOB China Acetic Acid maintained at $308/MT

Expert Opinion: Short-Term Pressure, Mid-Term Volatility Expected

• Acetic Acid prices may witness a modest correction in the short term due to reduced downstream consumption from ongoing plant turnarounds.
• However, firming natural gas prices, strong revival in bulk drug production, and easing geopolitical concerns may trigger a sudden rebound in prices.
• Buyers are advised to actively explore inventory-building opportunities during every price dip to mitigate supply chain risks.