Isophthalic Acid Prices Sail at the Edge as They Suffer From Weak Demand in the US

Texas- Isophthalic Acid prices in the US market remained on the sifter side as the demand outlook for the product from domestic and international markets remained challenging and subdued. Recently, the prices for recycled plastics have reached their lowest levels, causing significant challenges for those processing these materials. This trend has led some buyers of plastic resins to abandon using Post-Consumer Recycled (PCR) plastics and opt for virgin plastic instead. This price drop is observable in both the market for scrap plastics and, to varying extents, in the market for recycled plastic resins. Isophthalic Acid is the major component required for the production of PET resins, and sufficient supply amidst the slow demand proportionally impacted the overall market dynamics of Isophthalic Acid prices in the US market. In the third week of August, Isophthalic Acid prices in the US market settled at USD 1460 per MT, CFR Texas.

Market participants emphasized that the price decrease for plastic resins is a direct consequence of the principles of supply and demand. The current supply of virgin Polyethylene (PE), Polypropylene (PP), and Polyethylene Terephthalate (PET) plastics is notably higher than the demand for these materials. As a result, there has been a steep decline in the prices within the market, which has negative implications for the entire plastic supply chain. The situation is widely recognized as challenging within the isophthalic acid industry.

Crude oil prices in the domestic market play a major role in governing the overall market dynamics of isophthalic acid, as the production cost of Isophthalic Acid depends on the same. Mixed xylene is obtained from crude oil and is the major feedstock for isophthalic acid production. Up until now, the prices of mixed xylene were on the upper edge amidst the slow demand. However, the Energy Information Administration released data that revealed a significantly larger-than-anticipated decrease in US crude oil inventories for the previous week. However, there was an unexpected surge in gasoline stockpiles during the same period.

Oil prices experienced a 1% decline due to concerns arising from the increase in US gasoline stocks. This situation raised worries about the oil demand, especially after Japan and Europe reported discouraging manufacturing data. Despite this, prices rebounded from their lowest point during the trading session, as investors took note of the substantial reduction in US crude stocks, which was greater than initially expected.

In summary, the market for isophthalic acid is experiencing a significant price downturn due to a surplus in the supply of stockpiles with end-use manufacturing units compared to demand. This has led to challenges for plastic and other consumers due to unfavorable economic conditions. As per ChemAnalyst, isophthalic Acid prices in the US market are expected to follow a similar trend as the demand is anticipated to remain dim in the domestic market.