Stearic Acid Prices in the US Experience a Drop Due to Decreasing Feedstock Costs
Stearic Acid Prices in the US Experience a Drop Due to Decreasing Feedstock Costs

Stearic Acid Prices in the US Experience a Drop Due to Decreasing Feedstock Costs

  • 18-Oct-2023 5:08 PM
  • Journalist: Li Hua

Prices of Stearic Acid (Rubber Grade) have depreciated in the US market by 0.4% due to declining prices of Stearic Acid (Tripple Grade) by 0.5% in the exporting country of Indonesia. The prime reason for the depreciating prices of Stearic Acid was the declining costs of feedstock Palm Oil, which also depreciated by 1% in Indonesia in the first half of October.

The demand for Stearic Acid (Rubber Grade ) from the downstream automotive was high, as evidenced by automotive sales rising by almost 19% in the month of September, with minor fluctuations being expected in October, as major car manufacturers report the piling of automobiles in dealerships across the United States. Moreover, demand for Stearic Acid (Rubber Grade) from the Polyvinyl Chloride (PVC) processing sector was sluggish as PVC prices declined by approximately 1.5% in the first half of October 2023.

Demand for Stearic Acid (Rubber Grade) from Textile industries moderately strengthened as apparel sales increased by 0.7% in September, with more increments being expected in October due to the incoming festive quarter 2023 and fall season, which necessitated new clothing amongst the local populace. Apart from the primary automotive and textile industries, the Stearic Acid (Rubber Grade) finds its secondary application in the adhesive manufacturing sector of the construction industry. The performance of the construction industry across the United States was slow as mortgage rates remained high at almost 7%, which had deterred prospective homebuyers from making any investments in the construction industry. Moreover, according to the United States Bureau of Labor Statistics, the Producer Price Index for residential and non-residential construction increased by 0.3% and 0.2%, respectively, due to consecutive hikes in the interest rates by the Federal Bank to curtail inflation rates, which prove to be detrimental for the Stearic Acid market. Overall inflation rates across the United States stand at approximately 4%, depreciating moderately from September; however, core CPI increased by a further 0.3% in October 2023.

Overall, prices of Stearic Acid are expected to incline by a further 2% as the market for downstream applications improves towards the end of the end of October. Demand from the construction and automotive industries is expected to improve as the festive quarter of 2023 nears. Also, demand for Stearic Acid (Rubber Grade)  is expected to increase as a viscosity modifier for Crude Oil in the winter months of 2023, which may further improve the prices of the product. The minor improvements in the downstream application have proved insufficient to transform the market situation for Stearic Acid (Research Grade), whose prices observed a bearish situation from May 2023.

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