The prices of Acetic Acid in China have been rising consistently for the past week at exponential rates. The price was $1154 per tonne on 20th September which increased to $1160 per tonne on 21st September, further rising to $1188 per tonne the next day with the prices at a high of $1315 per tonne on 27th September. 

The reasons for the sudden and exponential rise in the prices are the ongoing environmental protection inspections and firm downstream demand. The ongoing environmental inspections have resulted in companies lowering their operating rates which has put extra pressure on the supply side. Several petrochemical companies have reduced their operating rates to as low as 40% in Shandong with two refineries shutting down operations. 

The demand from the downstream Vinyl Acetate Monomer (VAM) which is used in paints, adhesives, textiles, paper, films, etc. has also been firm in China resulting in further upwards pressure on the prices. 

Acetic acid is an organic compound and is one of the major chemical intermediates. The chemical has application in various end user industries such as textiles, inks, rubbers, plastics, and others. The major downstream products for Acetic Acid are Vinyl Acetate Monomer (VAM), Purified Terephthalic Acid (PTA), Acetic Anhydride, and Ester solvents (ethyl acetate & butyl acetate). The global demand for Acetic acid stood at around 17 million tonnes in 2020 and is expected to grow at a healthy CAGR of around 5% in the upcoming years. 

As per ChemAnalyst, “the prices of Acetic Acid are expected to continue to follow an upwards trajectory given that the ongoing environmental protection inspections are expected to continue till the next month. The demand from the downstream sectors has also been strong this will also create a pressure on the prices. The prices are expected to settle down once the companies return to the operating rates prior to the inspections.”