Monochloroacetic Acid Prices Show Bearish Trend in Germany Amid Weak Feedstock Costs
Monochloroacetic Acid Prices Show Bearish Trend in Germany Amid Weak Feedstock Costs

Monochloroacetic Acid Prices Show Bearish Trend in Germany Amid Weak Feedstock Costs

  • 21-Sep-2023 3:03 PM
  • Journalist: Nicholas Seifield

Over the past few months, Monochloroacetic Acid prices have continued to show a bearish rally across the European market. Weak upstream prices and steady downstream demand coupled with abundant material availability have weighed down the prices of Monochloroacetic Acid in the regional market.

According to the ChemAnalyst database, prices of Monochloroacetic Acid have inched lower in the German market. The feedstock Acetic Acid and Acetic Anhydride prices have dropped, resulting in the domestic market's low production cost of Monochloroacetic Acid. On the demand front, the inquiries of Monochloroacetic Acid from the downstream agrochemical industries have been stable, and downstream procurements were mainly based on immediate requirements. Therefore, Monochloroacetic Acid FOB Hamburg prices were settled at USD 1140/MT with a month-on-month decrement of USD 20/Tonne during August 2023.

Market participants reported the manufacturing firms were operating at reduced rates as demand from the downstream industries was not fully recovered. Furthermore, amid the bleak economic prospects, industrial production in Germany decreased by 2.12 percent in July of 2023 on a y-o-y basis, as demonstrated by data from the Federal Statistics Office. A decline in industrial production is contributing to an anticipated economic contraction in the German GDP during the second half of this year. On the other hand, according to the Association of German Chambers of Industry and Commerce, Germany has been struggling with labor shortage, leading to profound market challenges. Overall, the inventory level was sufficient to cater to overall downstream demand, leading to a Monochloroacetic Acid decrease in the domestic market.

Furthermore, BASF SE, manufacturer of Monochloroacetic Acid, has reported sales in the Agricultural Solutions segment during the second quarter of 2023, sales of €2.2 billion were 9.3% below the level of the prior-year quarter. The main reason for the price decline was the drop in volumes amid higher channel inventories in individual core markets and lower agricultural commodities prices. At €213 million, EBIT before special items was 4.3 percent below the previous year's quarter, especially due to lower volumes. Furthermore, BASF reported that demand would not be expected to decrease globally for the second half of 2023, as the inventories of chemical raw materials in most customers' industries have already been greatly reduced. However, there is only a tentative recovery as global demand for consumer goods will grow slower than previously assumed. In addition, margins are therefore expected to remain under pressure.

As per ChemAnalyst, prices of Monochloroacetic Acid are likely to increase but at a slower pace in the German market due to the rise in feedstock Acetic acid and Acetic anhydride prices. The demand for Monochloroacetic Acid from the downstream agrochemical industry is anticipated to recover in the upcoming months.

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