GNFC Leads Acetic Acid Price Hike as Traders Anticipate Further Gains

Price

• In the domestic market, acetic acid prices have seen an increase, with importers raising prices by INR 1/kg to INR 38.50/kg on an ex-Kandla basis and INR 39.00/kg on an ex-Mumbai basis for advance payment terms, driven by a surge in downstream demand.
• Domestic producer GNFC has also adjusted its prices, raising acetic acid prices by INR 1/kg to INR 39.00/kg on an ex-Bharuch basis with advance payment terms. This marks GNFC’s second price revision this week, prompted by strong downstream demand and higher replacement costs for imports, according to a leading market participant.
• Trader offers are reported at INR 38.50/kg ex-Kandla and INR 39.00-39.50/kg ex-Mumbai for spot transactions on 60-day credit terms. Bulk deals have been particularly active, with prices ranging between INR 38.00-38.50/kg ex-Mumbai on 75-day credit terms for August lifting.

Demand and Supply

• Acetic acid supply remains moderate, bolstered by good vessel arrivals this week. Additional arrivals anticipated in the second half of August could exert liquidation pressure on the market.
• However, increased demand from sectors like ethyl acetate, monochloroacetic acid, bulk drugs, dyes, and pigments is expected to support higher prices, according to a leading importer. The market trend in the first half of August 2024 is particularly crucial, as most traders have secured inventories for the month, anticipating further price increases.
• In China, acetic acid plants have been operating at higher rates since mid-June 2024, with demand also picking up across Asia. In India, demand from key consumers—including bulk drug manufacturers, ethyl acetate producers, amine producers, and MCA manufacturers—remains robust in August, driven by strong production schedules.
• Industries such as dyes, pigments, and PTA, which currently show subdued demand, are expected to see an uptick in demand in the second half of August due to seasonal factors, thereby supporting acetic acid consumption.
• India's monthly demand for acetic acid stands at approximately 125 kt, with primary consumers like ethyl acetate, MCA, and acetic anhydride accounting for nearly 65% of the total demand. Despite rising port inventories, bulk consumers are exercising caution in stockpiling and are refraining from making large-scale purchases.
• For the fiscal year 2024-25, acetic acid demand in India is projected to grow by 5.5%, driven by a positive market outlook. Accord Organics Pvt Ltd, an ethyl acetate manufacturer based in western India, has significantly expanded its production capacity, emerging as a key player and contributing to the overall growth of Indian acetic acid demand.

News

• On the international front, upstream crude oil benchmark WTI prices have experienced a slight decrease of 0.14% to $76.08 per barrel.
• Ethanol prices have declined by 1.26% to $1.75 per gallon. FOB China acetic acid prices remain elevated at $392/MT.

Expert's Opinion

• Forecasts suggest that acetic acid prices will remain stable this week, with higher replacement costs likely to keep prices elevated. The anticipated strong downstream demand is expected to support acetic acid prices in the short term. Buyers are advised to consider inventory opportunities as prices are expected to increase.