European Monochloroacetic Acid Prices Stay Bearish as Raw Material Costs Languish
- 25-Oct-2023 2:38 PM
- Journalist: Patricia Jose Perez
Towards the end of Q3, Monochloroacetic Acid prices witnessed a downward trend across the European market, and it is anticipated that prices might decline in the forthcoming months. The latest price drop was majorly attributed to the weak feedstock prices. In addition, tepid downstream demand and sufficient inventories among the manufacturers have further weighed down the prices of Monochloroacetic Acid in the regional market.
According to the ChemAnalyst database, prices of Monochloroacetic Acid have continued to drop in Europe's largest economy, Germany. Prices of Monochloroacetic Acid FOB Hamburg were settled at USD 1106/MT with a month-on-month decrement of USD 34/MT during September 2023. The cost pressure from feedstock Acetic acid and Acetic anhydride was limited as their prices settled on the lower side in the given time frame. Furthermore, Germany's annual inflation rate decreased from 6.1% in August to 4.5% in September. The European Central Bank raised its deposit rate to 4% within a year but indicated a pause due to early signs of inflation stabilizing. Despite dropping inflationary pressures, the purchasing sentiments of Monochloroacetic Acid end-use industries have remained under pressure, weighing on the market fundamentals of Monochloroacetic Acid among the manufacturers. Meanwhile, inquiries from the downstream agrochemical, dyes, and detergent industries have remained average. The market transactions were also based on immediate requirements and supported the prices to follow the downtrend in the domestic market. Despite the end of the holiday season observed in Q3, manufacturing firms have faced challenges in maintaining their production rates. As per the market sources, the Purchasing Manager Index for manufacturing settled at 39.6 in September, indicating a weak manufacturing sector. Furthermore, the German Chemical Industry Association reported an 8% year-on-year decrease in chemical production in the second quarter of 2023. In addition, the availability of finished stock of Monochloroacetic Acid was sufficient to cater to overall downstream demand, which encouraged the manufacturers to decline the prices of Monochloroacetic Acid in the domestic market.
Monochloroacetic Acid prices are likely to drop in Q4 of 2023 as manufacturers will destock their inventories available in the domestic market. Demand for Monochloroacetic Acid from the downstream agrochemical, dyes, and detergent industry is anticipated to remain bleak, leading to a price decline in the domestic market. Market players predict the tepid demand will keep exerting pressure on the seller's side as buyers either make limited purchases when needed or stay in a wait-and-see perspective in the projection of additional decline. In addition, feedstock Acetic acid and Acetic anhydride prices will also be observed on the minimal side amid weak demand from the terminal market, which will further ease the production cost of Monochloroacetic Acid. Furthermore, the manufacturing firm will operate at low rates amidst the ongoing lethargy in the end-products market.
On the other hand, the manufacturing Purchasing Manager Index is anticipated to remain in the contraction zone. Furthermore, inventory will remain adequate amid a decline in new orders, which might pressure the prices of Monochloroacetic Acid. In addition, foreseeing the weak economic prospects, the German Chemical Industry Association anticipates a 5% decrease in production and a 7% decline in oversales this year.