Ambiguous Terminal Demand Coerces the Acetylene Price Development in China

Shanghai, China: In China, the dropping crude oil values and dwindling market growth of downstream PVC have been pressuring the Acetylene market sentiments. The macro inflation factors and the subdued demand from the downstream construction sector have undermined the price development of Acetylene in the regional market. The high level of US commercial crude oil inventories and the increase in production targets of oil-producing countries (OPEC), compounded with a rise in interest rates by the Bank of England, has supported the contraction in WTI crude oil futures.

As per the observed market scenario, the sluggish downstream steel inquiries from overseas have led to a sharp decay in order booking, impeding the demand fundamentals of upstream Acetylene among the market players. The data depicts that China’s steel exports dropped by approximately 3% on a year-to-year basis at the end of the second quarter. In addition, the agile growth on the supply side amidst fewer inquiries from the downstream construction sector has caused downward pressure on the price realization of upstream Acetylene. As a result of crippling demand, the Chinese steelmakers have been extending their steel output cuts to sustain optimum netbacks from the transactions.

Furthermore, the Chinese government has decided to cut off the import tariffs on taxable items from economically deficit countries to comprehend the trade tensions with USA and Australia. The closer economic ties with countries across continental Asia will help China to reduce its reliance on Air or Sea Cargo as the goods can be shipped via trucks and trains.

The ChemAnalyst Experts anticipate that the consumption and production conditions of various downstream construction industries will likely improve following the rebound in the Chinese economy. However, the weakened domestic and international market demand will further limit the trade growth for Chinese manufacturers in the forthcoming weeks. The simultaneous tumbling downstream demand and uncertainties in global crude oil prices are likely to hamper the market development of Acetylene in the near term.