GNFC Raises Acetic Acid Prices on Tight Supply and Lunar New Year Disruptions

Key Highlights

1. Price Hike: GNFC increased Acetic Acid prices by ₹1/kg, with market offers likely reaching ₹42/kg.
2. Supply Constraints: Vessel scarcity and plant shutdowns, including Ineos Petronas Acetyls, disrupt February shipments.
3. Demand Surge: India's Acetic Acid demand rose to 165 kt in January 2025, driven by expansions in Ethyl Acetate and Acetyl product manufacturing.
4. Market Outlook: Prices expected to remain bullish due to constrained supply, growing downstream demand, and a narrowing Methanol-to-Acetic Acid price spread.

GNFC Hikes Acetic Acid Prices Amid Supply Tightness and Surging Demand

• Domestic manufacturer GNFC has increased its Acetic Acid price by ₹1/kg to ₹40.50/kg for immediate payment terms.
• The price hike is attributed to rising feedstock Methanol costs and improved downstream demand, according to a market participant. Upstream Natural Gas prices, which recently underwent correction, reached a two-year high earlier this week.
• In response to GNFC’s price increase, importers are withholding offers, anticipating further price surges. A leading importer indicated that today’s opening price levels are likely to be around ₹42/kg.

Acetic Acid Market Braces for Volatility as Supply Constraints Worsen

• Supply remains constrained as limited vessel availability for February 2025 shipments coincides with the Chinese Lunar New Year holidays.
• Additionally, major Acetic Acid and VAM producers, including Celanese and Ineos Petronas Acetyls, have announced plant shutdowns due to unfavorable conversion margins, as per market sources.
• In the Methanol-to-Acetic Acid production cost dynamics, a breakeven price spread of $55–60/tonne is required. 
• Currently, the price spread stands at $34/tonne, resulting in losses for manufacturers. Historically, Acetic Acid prices have shown sharp increases when the Methanol-to-Acetic Acid price spread narrows.
• Indian demand for Acetic Acid, estimated at 125 kt in January 2024, has risen to 165 kt by January 2025. This growth is driven by Accordd Organics Pvt Ltd’s tenfold expansion in Ethyl Acetate production capacity and the introduction of new Acetyl products such as N-Butyl Acetate and N-Propyl Acetate. 
• Additional downstream expansions in Mono Chloro Acetic Acid (MCAA), Chloroacetic Acid (CAC), Acetonitrile, and Diketenes have also bolstered demand. Furthermore, the launch of VAM-based paints and coatings by a leading domestic paint manufacturer is expected to support robust Acetic Acid demand in 2025.
• Traders, along with Acetyl and MCAA manufacturers, are building inventories in light of limited February shipments caused by the Chinese Lunar New Year holidays.

Chemical Market News and Global Update

• In international markets, upstream Crude Oil benchmark WTI prices declined by 1.07% to $77.88/barrel, while Natural Gas prices dropped by 7.28% to $3.94/MMBtu. Acetic Acid FOB China at 344
• Ineos Petronas Acetyls, a leading Acetic Acid manufacturer based in Malaysia, announced a plant shutdown in the second week of January 2025. The facility has an annual production capacity of 536 kt.
• Dow Chemical has shut down its Ethylene Oxide (EO) Unit located in Seadrift, Texas, USA, due to an electrical failure. The unit has a production capacity of 430,000 tons per year.
• Lotte Chemical Titan has shut down its Naphtha Cracker NC1 Unit in Pasir Gudang, Johor, Malaysia, to mitigate financial losses. The NC1 Cracker Unit has a production capacity of 430,000 tons per year of petrochemical intermediates, including Ethylene and Propylene.
• Alpek Polyester has restarted its No.1 and No.2 Purified Terephthalic Acid (PTA) Plants in Altamira, Tampico, Mexico, following feedstock issues. The two plants have a combined production capacity of 1 million tons per year.
• Sinopec Shanghai Petrochemical has restarted its Butadiene (BD) Plant after completing maintenance work. The plant, located in Shanghai, China, has a production capacity of 53,000 tons per year

Expert Opinion: Market Prices Expected to Climb Further

It is anticipated that Acetic Acid prices will remain volatile and bullish this week, driven by supply shortages and increasing downstream demand. Buyers are advised to explore inventory opportunities as the market braces for potential price surges.