Diminished Downstream Demand Drives Down Monochloroacetic Acid Prices in the US and Europe

The prices of Monochloroacetic Acid have experienced a consistent decline in both the US and European markets during July 2023, largely influenced by low feedstock prices. The underwhelming performance of the downstream industries across the respective market, coupled with the enduring pressures of inflation and sluggish economic growth, has cast a shadow over the prices of Monochloroacetic Acid.

According to ChemAnalyst's latest database, prices of Monochloroacetic Acid have decreased by USD 40/MT in the German market, backed by weak demand and sufficient inventories. The oversupplies of feedstock Acetic acid and Acetic anhydride have limited the positive development of Monochloroacetic Acid in the domestic market. Additionally, the ongoing cost of living crisis has created recessionary conditions in Europe, with PMIs indicating contracting activity. With wage increases not keeping up with inflation, consumers focus on survival and avoid discretionary spending on manufactured goods. Meanwhile, demand for Monochloroacetic Acid from the downstream agrochemical and surfactant industries has remained weakened amidst sluggish buying trends among the end-users, which weighed down the prices of Monochloroacetic Acid in the domestic market. According to ifo Business, Climate Index dropped from 88.6 points in June to 87.3 points in July. Furthermore, the market players have reported sufficient availability of the finished stock of Monochloroacetic Acid to meet the overall demand from the downstream industries. On the other side, the Purchasing Manager's index declined drastically from 40.6 in June to 38.8 in July, indicating a contraction in industrial and manufacturing activity. Therefore, Monochloroacetic Acid FOB Hamburg prices were settled at USD 1160/MT during July 2023.

On the other side, Monochloroacetic Acid prices have also been observed on the lower side in the US market. The macroeconomic headwinds, including firm inflationary pressure and high-interest rates, have eroded the consumer's pocket. Market players reported that inquiries from the downstream surfactant as well as from agrochemical industries remained inadequate, which supported the prices to follow a downtrend in the domestic market. At the same time, consumption from the overseas market has also slowed down. Furthermore, the level of inventories remained sufficient to cater to overall downstream demand, which further led to a decline in the prices of Monochloroacetic Acid in the domestic market. However, the US purchasing manager's index slightly increased from 46 in June to 46.4 in July, still below the bar performance. As per the market sources, new orders declined by 47.3 in June to 45.6 in July, reflecting a contraction zone. Moreover, on the upstream front, the Acetic acid and Acetic anhydride prices have decreased, which in turn led to the low production cost of Monochloroacetic Acid in the domestic market. Thus, as a result, Monochloroacetic Acid FOB Houston prices were settled at USD 1548/MT with a month-on-month decrement of 3.3% during the same time frame.

As per ChemAnalyst's anticipation, prices of Monochloroacetic Acid prices will likely follow a downtrend in the US and European markets due to further expectations of a decline in demand from the downstream industries. Feedstock Acetic acid and Acetic anhydride prices are projected to decrease, which might proportionally impact the prices of Monochloroacetic Acid.