GNFC Shutdown, Import Woes Trigger Price Hike in Indian Acetic Acid Market

Key Highlights:

• Price Hike: Acetic Acid prices increased to ₹42++/kg (Ex-Mumbai) amid tight domestic supply.
• Supply Disruption: GNFC shutdown and delayed import shipments triggered sharp price escalations.
• Demand Growth: Strong downstream demand from Ethyl Acetate, VAM-based paints, and acetyl derivatives.
• Market Outlook: Volatile pricing is expected to continue; cautious inventory planning is recommended.

Acetic Acid Prices Surge Amid Supply Disruptions

• Importers have increased Acetic Acid prices by ₹1/kg, bringing them to ₹42++ (Ex-Mumbai) and ₹41++ (Ex-Kandla) for 60-day credit terms.
• Traders have also quoted higher prices, with offers at ₹41++ (Ex-Kandla) and ₹41.50++ (Ex-Mumbai) for spot deals and immediate lifting under advance payment terms.
• This price surge is primarily driven by supply shortages. GNFC's annual maintenance shutdown and delays in Acetic Acid import shipments have led to a sharp price hike.
• Downstream manufacturers of Ethyl Acetate and Acetic Acid-based products have also raised their prices with immediate effect, in response to the rising cost of Acetic Acid.
• The announcement of reciprocal tariffs by the US last week has triggered bearish sentiment in global feedstock markets. Importers and indenters are now scheduling shipments with longer gaps, anticipating possible price corrections in the international market.

Rising Demand from Ethyl Acetate and New Derivatives

• Supply remained strong during February and March, supported by multiple import shipments. However, in the latter half of March, domestic Acetic Acid prices saw a correction due to weaker downstream demand, attributed to financial year-end constraints.
• Market dynamics shifted further in March when GNFC announced a three-week maintenance turnaround. Simultaneously, importers delayed vessel schedules as the market adopted a wait-and-watch stance following the US tariff announcement.
• India’s Acetic Acid demand, which stood at 125 kt in January 2024, has surged to 165 kt by January 2025. This growth is largely driven by Accord Organics Pvt Ltd’s tenfold expansion in Ethyl Acetate production capacity, along with the launch of new acetyl derivatives such as N-Butyl Acetate and N-Propyl Acetate. 
• Additional demand growth has stemmed from downstream expansions in Mono Chloro Acetic Acid (MCAA), Chloroacetic Acid (CAC), Acetonitrile, and Diketenes. Moreover, the recent launch of VAM-based paints and coatings by a leading domestic paint manufacturer is expected to support sustained demand for Acetic Acid throughout 2025.
• With limited shipments expected in March and April due to multiple plant turnarounds, supply constraints are likely to persist.

Global Feedstock Trends and Turnarounds Impacting Sentiment

• In global markets, upstream crude oil prices have declined, with WTI falling by 3.97% to $59.51 per barrel. Natural Gas prices also dropped by 3.31%, settling at $3.73/MMBtu.
• Feedstock prices remained soft, with CFR China Methanol at $275/MT and FOB China Acetic Acid at $330/MT.
• In April 2025, Taiwan Styrene Monomer Co (TSMC) plans to operate its No. 2 Styrene Monomer (SM) line in Lin Yuan, Taiwan, at 90% capacity. The plant has a production capacity of 160,000 tons per year. 
• Meanwhile, Fujian Billion Petrochemicals has taken its Purified Terephthalic Acid (PTA) unit offline for maintenance in Quanzhou, China; the facility has a capacity of 2.5 million tons per year. 
• Additionally, Hengli Petrochemical is set to shut down its Styrene Monomer (SM) plant in Liaoning, China, for maintenance during the first half of April. The plant’s production capacity stands at 720,000 tons per year.

Expert Opinion: Volatility Expected to Persist in Near Term

Experts anticipate that Acetic Acid prices will remain volatile and bullish in the coming week, driven by tight supply conditions and strong downstream demand. Buyers are advised to plan their inventories carefully as the market braces for further price increases.