Declining Benzoic Acid Prices in European Market Raise Concerns Among Industry Experts
Declining Benzoic Acid Prices in European Market Raise Concerns Among Industry Experts

Declining Benzoic Acid Prices in European Market Raise Concerns Among Industry Experts

  • 10-Jan-2024 6:01 PM
  • Journalist: Timothy Greene

The recent and notable decrease in the prices of Benzoic Acid in the German market during December 2023 has sent ripples through the industry, defying earlier projections, and prompting industry players and analysts to reassess their strategies.

Market experts and traders, who strategically built-up Benzoic Acid stocks in anticipation of a surge in demand, now find themselves grappling with the unexpected shift in Benzoic Acid pricing dynamics. The initial anticipation was grounded in the expectation of increased inquiries from the downstream sector of Benzoic Acid, leading to proactive stockpiling of excipients. However, the market took an unforeseen turn as December approached, necessitating merchants to recalibrate their inventory levels in response to the evolving landscape.

One of the primary contributors to the declining prices of Benzoic Acid in Germany was the reduction in prices observed across key exporting nations, with a notable impact originating from Chinese provinces that wield significant influence in the Benzoic Acid market. The parallel decrease in the prices of raw materials, particularly the decline in Toluene prices towards the end of 2023, played a crucial role in amplifying the diminished cost of Benzoic Acid in Germany.

The reduction in raw material Toluene prices was attributed to a sustained drop in consumption, impacting not only production but also contributing to the overall weak and consolidated market conditions of Benzoic Acid. In December, China experienced a notable decrease in crude oil imports, hitting a four-month low, reflecting the prioritization of high prices over optimistic demand forecasts from major industry entities such as OPEC and the International Energy Agency (IEA).

Despite a relatively positive domestic demand outlook in China, major industry players opted to decrease their listing prices for both Toluene and Benzoic Acid. This, combined with a lack of enthusiasm among buyers and a subsequent decrease in transaction volume, led to an overall stagnation in commodity prices in China including Benzoic Acid. Market participants have become more cautious due to the absence of clear references in futures and crude oil prices, coupled with a rise in China's Purchasing Managers' Index (PMI) to 50.7 in the preceding month.

Multiple shipping firms and a handful of liquefied natural gas (LNG) tankers are opting to avoid the primary East-West trade route due to recent attacks by Yemen's Houthi group on commercial vessels in the southern part of the Red Sea, further contributing to the complex market conditions.

In the Eurozone, manufacturing activity has seen a decline in Toluene, with order book volumes experiencing one of the most significant drops in decades, fueled by an ongoing destocking trend. The PMI in the country was observed at 42.6 at the end of last month, reflecting the challenges faced by industry.

Looking ahead, concerns about the supply side, fueled by geopolitical tensions and restricted flows of January cargoes from the Middle East, may lead to a surge in Benzoic Acid prices in the Asian and European markets. Traders and analysts report that some purchasers are exhibiting reluctance to make payments at these elevated levels, considering narrow production spreads and an overall cautious outlook on downstream demand. The Benzoic Acid market remains dynamic, with stakeholders closely monitoring global developments for their impact on future pricing and demand trends.

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