Sluggish Downstream Demand Exerts Downward Pressure on Monochloroacetic Acid Prices in the USA and European Markets

Since the commencing of April 2023, prices of Monochloroacetic Acid have gained a downtrend across the USA and European markets as weak cost pressure from the feedstock prices. Sluggish offtakes from the downstream industry and ample supply in the regions have further weighed down the prices of Monochloroacetic Acid. Furthermore, volatility in the crude oil prices, economic uncertainty, and the prospect of rising interest rates by the US Federal Reserves and European Central Bank (ECB) continued to hang over the Monochloroacetic Acid market.

Monochloroacetic Acid prices have been observed on the weaker side in the European market, the demand sentiment has been substantially pessimistic, and manufacturers were encouraged to drop the quotations to stimulate better inquiries, although there have been inadequate new orders reported by market participants. Furthermore, feedstock Acetic Acid and Acetic Anhydride prices have decreased, resulting in the domestic market's soft production cost of Monochloroacetic Acid. In addition, at the beginning of April, OPEC+ announced to cut Crude Oil production to 1.2 million barrels per day (b/d) until the end of the year, which increased Crude Oil prices in anticipation of tightening oil supplies. However, ongoing consequences of deteriorating global economic circumstances, perceived risk across the global banking sector, and continuing inflation offset the initial rise in Crude Oil prices and led to lower prices in the region. On the other side, demand for Monochloroacetic Acid from the end-user agrochemical industry has been dull, which further weighed down the prices of Monochloroacetic Acid. Thus, Monochloroacetic Acid FOB Hamburg prices in Germany were settled at USD 1165/MT with a month-on-month decrement of USD 55/MT during April 2023. 

Similarly, in the USA market, the slow demand dynamics from the downstream agrochemical has translated into a drop in prices while there was supply disruptions were observed on the US West Coast ports, but the supply chain improved in the last week of April. In addition, domestic production cost has remained soft amid bearish feedstock Acetic Acid and Acetic Anhydride prices. According to the sources, purchasing manager's index has improved slightly but remained below 50 (i.e., 47.1) in April, indicating a contraction in industrial and manufacturing activities. Overall, dull demand from both the domestic and international markets, along with ample material availability, has led to a price reduction in the domestic market. Hence, prices of Monochloroacetic Acid were offered at USD 1500/MT with a decline of USD 50/MT on a monthly basis.

As per ChemAnalyst's anticipation, Monochloroacetic Acid prices are expected to drop further in the USA and European market as feedstock Acetic Acid and Acetic Anhydride prices may decline. Furthermore, demand for Monochloroacetic Acid from the downstream agrochemical and other value chain industries is expected to be lackluster amid a slowdown in the global economic recovery.