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Acetic Acid Prices Surge in US, Germany Amid Rising Demand
Acetic Acid Prices Surge in US, Germany Amid Rising Demand

Acetic Acid Prices Surge in US, Germany Amid Rising Demand

  • 03-Apr-2024 3:43 PM
  • Journalist: Francis Stokes

Texas (USA): In the US market, Acetic Acid prices have increased sharply this week, mainly propelled by the escalating prices of its primary feedstock, Methanol. Additionally, inventory levels have remained relatively low, aligning with the ongoing downstream demand. Furthermore, the Purchasing Managers' Index (PMI) has consistently surpassed the 50 mark, indicating an expanding economy and heightened demand from Acetic Acid downstream sectors, particularly the flourishing construction industry, which has bolstered the requirement for Ethyl Acetate and Butyl Acetate.

Moreover, the uptick in natural gas prices has added pressure on production costs. Expectations are high for Acetic Acid prices to continue their upward trend due to the ongoing rise in Acetic Acid upstream Methanol prices. However, the construction sector grapples with challenges such as a shortage of skilled labour and increasing prices of raw materials and wages, contributing to elevated production costs. Despite these challenges, demand from the downstream sector remains strong and is anticipated to remain bullish.

While US construction spending unexpectedly declined in February 2024, mainly due to weaknesses in non-residential and public projects, the overall construction industry showed year-on-year growth. On a month-on-month basis, February followed the declining Acetic Acid trend seen in January, but March has witness increase in Acetic Acid prices due to growth in the overall construction sector compared to the previous month, creating positive market sentiments.

As of this week, Acetic Acid prices in the German market have seen a noticeable uptick, primarily due to increased costs of Feedstock Methanol. Methanex's March monthly report highlighted a surge in Acetic Acid upstream Methanol contract prices, impacting downstream prices across the supply chain.

Although Natural Gas prices have decreased with the conclusion of the heating season in Europe, constrained upstream oil supply, driven by OPEC+ production cuts, has led to higher oil prices. Acetic Acid manufacturers faced higher production costs due to premium Methanol inventory prices.

Moreover, despite relatively low import prices from China, elevated freight rates from longer shipment routes have extended delivery times, exerting upward pressure on prices in the German market. Despite the price rise, demand from downstream sectors like Ethyl Acetate and Butyl Acetate, primarily used in the construction sector, remains subdued.

However, German officials, including Chancellor Olaf Scholz and Construction Minister Klara Geywitz, are optimistic that falling interest rates and new tax incentives will revitalize the country's construction sector and bolster overall economic growth.

Looking ahead, expectations suggest Acetic Acid prices in the European market may continue to increase in the coming weeks, driven by firm demand from downstream industries, while import prices from China are anticipated to rise further. Additionally, there is speculation of declining interest rates in the upcoming weeks, which could further uplift sentiments in downstream Acetate industries.

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