Stable Dutch Acetic Acid Prices Face Headwinds from Sluggish Demand
Stable Dutch Acetic Acid Prices Face Headwinds from Sluggish Demand

Stable Dutch Acetic Acid Prices Face Headwinds from Sluggish Demand

  • 07-May-2024 5:51 PM
  • Journalist: Jacob Kutchner

Rotterdam (The Netherlands): The Acetic Acid market in the Netherlands has demonstrated stability, largely driven by consistent Acetic Acid feedstock methanol prices reported by Methanex. The company indicated an upward trend in May contract prices in its monthly update. Moreover, market stocks remained sufficient to meet downstream demand. Additionally, the European Central Bank's maintenance of a 4.5% interest rate since 2024 has contributed to market stability. In April 2024, the Manufacturing PMI for the euro area remained steady from its March value.

This latest reading suggests a slightly accelerated decline in manufacturing business conditions, primarily due to a sharper decrease in new orders, notably significant for the year-to-date. Suppliers’ delivery times notably shortened, marking the most significant reduction in eight months. Furthermore, import prices from China rose this week, contributing to overall higher Acetic Acid import costs. Heightened tensions between Iran and Israel are anticipated to increase freight charges and insurance premiums for global shipping routes, particularly affecting vessels bound for western European countries and the US.

Freight rates have already increased per Acetic Acid containers for ships navigating the Red Sea due to disruptions and capacity constraints. Moreover, Henan Shunda Chemical Technology Co. Ltd. in Zhumadian, China, with a total operating capacity of 33,333 TPM, was operating at 24,731 active operating activity. The ongoing Red Sea crisis continues to disrupt Acetic Acid supply chains, particularly impacting Acetic Acid Asian markets, with no resolution in sight. Despite this, domestic production remains robust, meeting the high demand from Acetic Acid’s downstream industries, especially in construction.

Feedstock methanol prices have remained steady, driven by stable Acetic Acid production costs. However, there's anticipation of price increases due to heightened risks from Houthi activity in the region. Ocean freight rates from Asia to Europe are exceeding contract rates as vessel capacity tightens amid the crisis. Efforts to mitigate longer transits via southern Africa are facing challenges, limiting additional space availability. Demand for Acetic Acid downstream ethyl acetate and butyl acetate remains low in the Netherlands due to sluggish growth in the construction sector.

Last year, the drop in demand for housing loans was mainly due to decreased affordability of homes. This year, despite expected increases in wages, housing affordability is unlikely to improve much due to rising house prices and steady mortgage rates. Over the past two years, mortgage rates in the eurozone have nearly tripled, making it harder for potential buyers to afford homes. This has led to a significant decrease in demand for housing loans and downward pressure on house prices. However, there were variations across countries, with Germany experiencing a significant drop in house prices, the Netherlands seeing a slight decrease followed by a rapid rise, and Belgium maintaining modest growth thanks to wage indexation and extended borrowing terms for households.

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