Heavy Rains Weigh on Acetic Acid Market, but Firm Methanol Prices Hint at Short-Term Rebound

Price

• Importers have reduced the price of Acetic Acid today by ₹1/kg, bringing it to ₹35++ Ex-Kandla and ₹37.00++ Ex-Mumbai on advance payment terms.
• In response, domestic manufacturer GNFC also decreased its Acetic Acid price by ₹1/kg, setting it at ₹38.00++ on advance payment terms Ex-Bharuch.
• Bulk buyers showed interest at ₹33++ Ex-Kandla and ₹35++ Ex-Mumbai on advance payment terms; however, importers are currently unwilling to offer at these levels.
• Trader offers were also mixed, with some lower at ₹36++ Ex-Kandla and ₹38++ Ex-Mumbai on 60 days credit, driven by liquidation pressure and anticipated price corrections.
• The reduction in Acetic Acid prices is attributed to weak demand in the West and South, where heavy rainfall and flooding have caused many bulk consumers to shut down operations due to the cyclone.

Demand and Supply

• Supply for the first half of September 2024 appears stable with scheduled vessel arrivals. Despite replacement costs remaining high and port inventories at optimistic levels, domestic Acetic Acid prices have not rebounded.
• Demand remains weak from Ethyl Acetate manufacturers, who continue to face conversion losses, leading to reduced operating rates.
• The market's focus is now on bulk drug demand, which shows promise due to robust production plans in the pharmaceutical sector.
• The Asian Benchmark CFR China Acetic Acid prices have fallen by nearly $38/MT over the past two weeks, driven by weak downstream demand.
• Indentors are reluctant to book volumes in this scenario, as traders and buyers strongly resist higher prices, according to a manufacturer from China.
• Despite the bearish trend in downstream Acetic Acid, upstream methanol prices remain bullish and stable, which could aid in an Acetic Acid price rebound, an Indian importer suggested.
• India's monthly demand for Acetic Acid is approximately 125 kt, with key consumers such as Ethyl Acetate, MCA, and Acetic Anhydride accounting for nearly 65% of total demand.
• 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 in Indian Acetic Acid demand.

News

• In the international market, upstream Crude Oil benchmark WTI prices stand at $73.20 per barrel, while Natural Gas prices increased by 1.13% to $2.15/MMBtu.
• Feedstock CFR China Methanol prices are at $293/MT, and downstream Acetic Acid prices have decreased by nearly $38 over the last two weeks, now at $395/MT.

Expert Opinion

• Acetic Acid prices are expected to remain bearish this week due to weak downstream demand caused by heavy rainfall and price corrections in the Asian benchmark CFR China.
• However, firm feedstock Methanol prices and strong bulk drug demand are likely to provide short-term support for Acetic Acid. Buyers are advised to consider inventory opportunities during price dips, as a rebound in Acetic Acid prices is possible.