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The Global H-Acid market plunged in Jan 2024 amid sluggishness in downstream purchases
The Global H-Acid market plunged in Jan 2024 amid sluggishness in downstream purchases

The Global H-Acid market plunged in Jan 2024 amid sluggishness in downstream purchases

  • 12-Feb-2024 3:16 PM
  • Journalist: Patrick Knight

The H-Acid global market witnessed a slight decline in its price trend due to the decreased prices of the upstream Naphthalene, Sulphuric Acid, and Ammonia which resulted in reduced production costs. Furthermore, due to the sluggish demand from the downstream textile sector and sufficient inventory levels, the prices of H-Acid fell in the first month of 2024.

During the first week of the year 2024, the price trend of H-Acid fell slightly by 0.8% and settled at USD 4780/MT (CFR-Texas) during January 2024. Due to the adequacy of the existing inventory levels, the trade inflows from the Chinese market to the US market were slowed down to avoid further possible losses in the prices of H-Acid. In January 2024, the PMI of the US witnessed an incline as compared to December 2023. While the overall growth was only marginal, it was buoyed by a resurgence in new orders and a more gradual contraction in output. Unfortunately, production faced hindrances due to a renewed decline in supplier performance and extended delivery times for inputs. The increase in transportation costs contributed to higher input prices during the month, leading to cost inflation reaching a nine-month high. Additionally, in terms of the upstream market, the prices of Ammonia, Sulphuric Acid, and Naphthalene declined resulting in the overall decline of the production cost. In terms of the spread, the difference between the feedstocks and H-Acid was less showcasing the bearish H-Acid market in the USA.

At the same time, the South Korean market of H-Acid also followed a downward price trend of 0.63% due to the ample inventory levels and lackluster demand from the downstream Textile enterprises. In terms of the upstream market, the prices of Sulphuric Acid also followed a downward trend which resulted in the reduced production cost of H-Acid Additionally, South Korea's PMI for January 2024 demonstrated an uptick compared to December 2023, indicating a general increase in manufacturing activity in the country during the first month of 2024. According to Statistics Korea, the Consumer Price Index (CPI) in South Korea rose to 113.15 points in January, up from 112.71 points in December 2023. Focusing on the spread, the difference between the prices of feedstocks and H-Acid narrowed showcasing the bearishness in the H-Acid market situation.

Similarly, in the European market, the prices of H-Acid declined due to the low production cost as the prices of its feedstocks, Sulphuric Acid, Ammonia, and Naphthalene showcased a declining trend. Furthermore, the adequacy of the existing inventory levels and low demand with the reduced consumption rate resulted in the low prices of H-Acid. The PMI of Belgium rose in January 2024 as compared to December 2023 representing the increased overall production level of the goods. According to Statistics Belgium, the Consumer Price Index (CPI) in Belgium increased to 130.08 points in January from 129.45 points in December of 2023.

The frequent attacks in the Red Sea, a crucial waterway handling around 12 percent of global trade, have forced companies to confront difficult decisions. Opting for the Red Sea route comes with the risk of aerial strikes and higher insurance costs. Conversely, avoiding this route leads to costly delays, posing challenges for businesses grappling with security concerns. Since mid-December, maritime freight prices have seen a significant spike, with rates tripling on the Asia to Europe route and doubling for shipments between Asia and the Eastern Coast of the US, according to reports from Xeneta. As a result, an alternative route, the Cape of Good Hope, is being chosen to mitigate risks, albeit at the expense of increased freight charges. Despite these conditions, H-Acid prices declined due to weak demand from downstream Textile enterprises.

As per ChemAnalyst, the prices of H-Acid are anticipated to incline in the upcoming weeks as it is expected that the existing inventories might be lowered and the demand from the downstream textile sector may increase due to which the production rate and the trading activities from the Chinese market might rise which may result in the increased prices of H-Acid.

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