GNFC Maintenance, Port Delays Fuel Acetic Acid Price Rally in India

Key Highlights

1. Prices Up by ₹2.5/kg: Ex-Mumbai rates at ₹41.50++, Ex-Kandla at ₹42.00++ for 60-day credit terms.
2. GNFC Shutdown Adds Pressure: Dispatches halted till April 18 due to annual maintenance.
3. Demand Rises 32% YoY: Driven by expansions in acetyl derivatives and paints.
4. Outlook Remains Firm: Tight supply and robust downstream consumption to keep prices elevated.

Price Revision and Current Levels

• Importers have revised Acetic Acid prices upward by ₹2.5/kg, bringing the new levels to ₹41.50++ (Ex-Mumbai) and ₹42.00++ (Ex-Kandla) for 60-day credit terms.
• Traders have also firmed up their quotations, offering material at ₹41.50++ (Ex-Kandla) and ₹41.75++ (Ex-Mumbai) for spot deals with immediate lifting against advance payment.
• The price escalation is primarily attributed to constrained supply availability.
• Domestic producer GNFC is currently undergoing its annual maintenance shutdown, resulting in the suspension of Acetic Acid dispatches until 18th April 2025.
• Further compounding the tightness, import vessel delays and minimal inventory at ports have exerted additional upward pressure on prices.
• Downstream consumers, particularly manufacturers of Ethyl Acetate and Acetic Anhydride, have responded to the cost push by implementing immediate price hikes for their respective products.
• Additionally, the recent imposition of reciprocal tariffs by the United States has disrupted the global supply chain, impacting feedstock procurement and downstream derivatives across markets.

Supply Disruptions and Import Delays

• While supply remained restricted in March, the usual slowdown in demand due to fiscal year-end closing (March 2025) did not significantly impact Acetic Acid prices. However, the announcement of GNFC's temporary shutdown in April has triggered a fresh rally in prices.
• The ongoing delays in import vessel arrivals are expected to further tighten the market in April, potentially leading to acute short-term shortages.
• Market sentiment turned bearish across Asian markets in response to US tariff-related developments, altering the broader trade outlook.
• India’s demand for Acetic Acid, which was recorded at 125 kt in January 2024, has grown significantly to 165 kt by January 2025. This surge is largely driven by a tenfold capacity expansion by Accord Organics Pvt Ltd in Ethyl Acetate production, alongside the commissioning of new acetyl derivative lines such as N-Butyl Acetate and N-Propyl Acetate.
• Further demand momentum is being seen from capacity expansions in downstream segments including Mono Chloro Acetic Acid (MCAA), Chloroacetic Acid (CAC), Acetonitrile, and Diketenes. Additionally, a major domestic paint manufacturer’s recent launch of VAM-based paints and coatings is expected to sustain Acetic Acid demand growth through 2025.
• Grasim Industries is also expected to commence operations at its new Mono Chloro Acetic Acid facility on the east coast in April, which will contribute to regional demand expansion.
• With limited shipments anticipated during the month, supply constraints are likely to continue throughout April.

Market News: Global Trade and Feedstock Influence

• In international markets, crude oil prices have shown mixed trends. WTI crude edged up by 0.95% to settle at $62.08 per barrel. Meanwhile, Natural Gas prices declined by 1.28%, closing at $3.48/MMBtu.
• Feedstock prices remained under pressure, with CFR China Methanol assessed at $268/MT and FOB China Acetic Acid pegged at $330/MT.

Expert Opinion and Short-Term Forecast

It is expected that Acetic Acid prices to remain volatile and firm in the upcoming week, supported by continued supply tightness and robust downstream demand. Buyers are advised to manage their inventories prudently, as further price escalations cannot be ruled out in the short term.