Weak Downstream Demand and Firm Supply Weigh on Acetic Acid Prices

Chemical Price: Acetic Acid Prices Revised

• Acetic Acid prices have been revised downward by importers, dropping by ₹0.5/kg to ₹37++ per kg ex-Mumbai and ₹36++ per kg ex-Kandla on 60-day payment terms. However, traders have quoted lower offers, with prices at ₹36.00++ per kg ex-Mumbai and ₹35.50++ per kg ex-Kandla for advance payment transactions.
• Bulk buyers have shown interest in purchasing at ₹34.50++ per kg ex-Mumbai on 60-day credit terms. Despite this, importers are hesitant to sell at these levels, expecting prices to fall further due to weak downstream demand and lower replacement costs.
• The decline in Acetic Acid prices can primarily be attributed to reduced demand from Ethyl Acetate and Acetic Anhydride manufacturers, which has put additional pressure on the market.

Chemical Demand and Supply

• Acetic Acid supply remains robust with steady vessel arrivals. However, demand has been notably weak, particularly from the Ethyl Acetate sector, as the bulk drug and extraction manufacturing industries have slowed down. This sluggish demand has negatively impacted the market, contributing to a bearish sentiment.
• The pigments and dyes segment has exhibited strong demand, which has provided some stability to the market.
• Demand for Mono Chloro Acetic Acid (MCA) has been subdued this week, as reduced production rates in the bulk drug manufacturing sector have further weakened market conditions.
• India’s monthly Acetic Acid demand stands at approximately 125-130 kt, with key downstream sectors such as Ethyl Acetate, Acetic Anhydride, and MCA consuming nearly 65% of the total volume.

Chemical News: Overall Market Outlook

• In the international market, upstream crude oil benchmarks have shown modest gains, with WTI prices rising by 0.36% to $70.83 per barrel.
• Additionally, natural gas prices increased by 0.59%, reaching $2.48/MMBtu, adding some pressure on production costs.
• Sinopec-SK Wuhan Petrochemical has shut its MEG Plant. The Plant is located in Hubei, China with a production capacity of 280,000 Tons/Year.
• In plant-related developments, Oriental Petrochemicals, a leading PTA producer based in Taiwan, announced a scheduled plant shutdown from early September to mid-October 2024. The plant has an annual production capacity of 1.5 million MT, which could potentially influence market dynamics in the region.

Chemical Market Key Takeaways

Acetic Acid prices are expected to remain mixed this week, driven by steady vessel arrivals and weak demand from the Ethyl Acetate and bulk drug industries. However, many market participants anticipate a price rebound post-October, driven by the recovery in VAM prices.