German Monochloroacetic Acid Prices Face Challenges Amidst Sluggish Downstream Demand

Since the beginning of October 2023, Monochloroacetic Acid prices have continued to stumble across the European market due to fragile upstream prices. Despite earlier attempts to recover their margins, producers had to concede to decrease varying in size amid a weak demand outlook and sufficient supplies. Furthermore, given the recent circumstances, Monochloroacetic Acid prices might experience a further decline due to lower feedstock prices and weak downstream demand.

According to ChemAnalyst's latest database, prices of Monochloroacetic Acid have declined by USD 19/MT in the German market. The feedstock Acetic acid and Acetic anhydride prices have decreased, resulting in the low manufacturing cost of Monochloroacetic Acid, supporting the downshift observed in the market fundamentals of Monochloroacetic Acid in the domestic market. On the demand side, the downstream agrochemical and surfactant industry inquiries have remained subdued, with limited instances of new orders reported by market players, leading to bearish market sentiments for Monochloroacetic Acid. The spot market transactions were also light as the enthusiasm of terminal firms to enter the market was not strong. On the other hand, despite lower inflation from recent European Central Bank policy measures, tepid downstream demand has prevailed, negatively impacting the market sentiments of Monochloroacetic Acid. Consequently, manufacturer prices have seen a subsequent decline.

In addition, the manufacturing firms were operating at low rates as demand from the downstream industry had not been fully retrieved in the domestic market. The German manufacturing Purchasing Manager Index (PMI) remained in the contraction zone, indicating a deterioration in new orders. Market players reported inventories have accumulated due to a slowdown in consumption. In addition, producers were also facing added pressure to clear the high level of inventories as the year-end approaches. Overall, the movement of finished goods was unimpeded, as no major supply chain constraints have been reported in the given timeframe. Freight rates have remained at low levels amidst the decline in global demand. As a result, prices of Monochloroacetic Acid FOB Hamburg were settled at USD 1087/MT during October 2023.

Monochloroacetic Acid prices might decrease in the upcoming month due to further expectations of a decline in feedstock Acetic acid and Acetic anhydride prices, which may surpass the positive development of Monochloroacetic Acid within the domestic market. Additionally, the off-peak season, combined with a global economic slowdown, may continue to dampen the buying enthusiasm from both converters and end-users, leading to a slow inventory destocking pace. Furthermore, operating rates are likely to remain low as a downstream industry will be unwilling to procure amid sufficient availability of finished Monochloroacetic Acid stocks in their inventories. On the other hand, there is anticipation that a price recovery might take place in the first quarter of 2024, driven by potential domestic demand recovery, supporting higher Monochloroacetic Acid prices across the German market.