September 2023 Sees Bearish Trend for DAA Prices Amid Weak Demand in US
- 28-Sep-2023 3:17 PM
- Journalist: Shiba Teramoto
In September 2023, the price of Diacetone Alcohol (DAA) continued to exhibit a bearish pattern, primarily due to weak demand from downstream industries such as solvents, paints, and coatings. As the third quarter ended, US businesses reported a general stagnation in their production activities. Both manufacturers and service providers faced subdued demand conditions. DAA manufacturers saw a decrease in new sales and fresh orders, although the rate of decline was somewhat less severe. Additionally, there was notable upward pressure on costs as input prices increased. These factors collectively indicate a challenging economic environment with limited growth prospects in the US business sector.
Furthermore, the persistent decline in overseas orders has contributed to another reduction in overall client demand for DAA. Despite adequate stocks of DAA to meet domestic requirements, the subdued demand prompted firms to reduce their purchasing activities in September 2023. Companies in the US market chose to work with existing stock levels rather than expanding their procurement efforts, contributing to an overall improvement in supplier performance.
Although manufacturing enterprises in the DAA continued to experience a decline in production in September, this deceleration decline was primarily driven by the service sector, which reported the slowest growth in business activity. Companies noted that this decrease in production resulted from a reduced inflow of new orders, leading to increased unused capacity in the DAA market in the United States. Furthermore, businesses frequently cited high-interest rates and inflationary pressures as contributors to weak customer demand, affecting their overall output. As a result, the subdued demand environment led to a more rapid decline in new business in September. Service sector firms, in particular, experienced a significant drop in new business due to the impact of high inflation and interest rate hikes on customer purchasing power.
Despite a sluggish sales climate, American businesses saw a rise in hiring activity in September. Additionally, companies observed that job openings were filled more effortlessly than in previous months. Both manufacturing and service firms experienced accelerated growth in their workforce during this period, with the service sector particularly showing a noteworthy increase in hiring.
According to ChemAnalyst, the cost of DAA was hovering around USD 1950/MT on a FOB Texas basis.
Regarding pricing projections, there is an expectation of improvement in DAA prices in the near future. However, it's worth noting that the impact of high interest rates could potentially diminish the purchasing capacity of petrochemical products such as DAA within the US market.