Acetic Acid Prices Show Improvement amid Rising Cost Support
Acetic Acid Prices Show Improvement amid Rising Cost Support

Acetic Acid Prices Show Improvement amid Rising Cost Support

  • 01-May-2024 3:43 PM
  • Journalist: Jung Hoon

Texas (USA): The US market for Acetic Acid is currently undergoing a significant period of expansion, marked by a notable surge in prices driven primarily by the sustained high costs associated with methanol, its principal Acetic Acid feedstock. This upward trajectory finds correlation with the Purchasing Managers' Index (PMI) surpassing the pivotal threshold of 50, signalling a robust manufacturing sector and heightened demand from downstream industries, particularly the construction sector.

The recent conclusion of Europe's heating season has had a negative impact on Acetic Acid production costs, resulting in reduced demand for natural gas. Job data from the construction sector paints an optimistic picture, with growth reported in 31 states compared to January, culminating in a robust 2.7% year-over-year increase nationwide. However, future projections suggest potential challenges, as Acetic Acid prices are expected to rise due to climbing crude oil prices and consistent demand from downstream sectors.

While natural gas prices are anticipated to remain elevated amidst global economic recovery, potentially impacting production costs, domestic Acetic Acid plants are presently adept at meeting both domestic and international demands. Despite the impact of methanol price increases on production costs this month, there has been a notable shift downstream. Initially, olefin factories scaled back methanol procurement, reflecting cautious market sentiment due to weak demand. However, a subsequent surge in inquiries for Acetic Acid downstream Ethyl and Butyl acetate, both crucial downstream products, has significantly bolstered the Acetic Acid market.

In the US, Acetic Acid prices have surged this week, primarily attributable to the rise in feedstock methanol prices. Methanex's monthly contract pricing has observed a surge in methanol prices in the US market. Moreover, the PMI value remaining above 50 indicates expansion in the manufacturing sector, with heightened demand from the downstream construction sector leading to increased inquiries from Acetic Acid downstream acetate industries. Additionally, production costs remained low as Europe recently exited its heating season, resulting in decreased demand for natural gas from the continent.

Furthermore, there is anticipation of Acetic Acid price increases due to rising cost support from feedstock Methanol and increased demand from downstream derivatives including acetates. This is likely to keep the prices high in the remaining of the second quarter and bodes well for the forth coming peak demand season in the third quarter of 2024. Acetic Acid market had diminishing return in the past few quarters especially in the European region, however recent price changes bring optimism for the market participants. Additionally, it is expected that natural gas prices will remain elevated amidst global economic recovery, leading to higher production costs.

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