US Diacetone Alcohol Prices Surge Amid Rising Feedstock Costs and Demand Improvement

The price of Diacetone Alcohol (DAA) started to rise in mid-October 2023, driven by the consistent improvement in the price of its feedstock, Acetone, and modest improvement in buying activities from downstream industries. In the domestic market, there was a firm demand for DAA during this period, primarily because of the prolonged stagnation in material prices. Merchants in the US market have initiated the replenishment of DAA materials in anticipation of future demand from the coating and other related industries. The construction sector experienced an increase in material costs in October compared to September 2023, suggesting that price hikes were more prevalent than in the previous month. Increases in the prices of oil and materials derived from oil resulted in higher cost burdens in the manufacturing sector.

In October 2023, US companies indicated a slight expansion in their business activities. This followed a period of generally stagnant output observed in August and September. Some DAA manufacturers noted improved activity levels as the decrease in demand became less severe. Demand conditions at these manufacturers showed a slight improvement, and service providers experienced a slower decline in new orders. During the same period, there was a minor easing of inflationary pressures, and firms increased their selling prices moderately. However, manufacturers reported lower optimism as backlogs of work decreased despite a slight increase in new orders. Manufacturers, particularly in the goods production sector, attributed the expansion to notable demand conditions for DAA, which led to a renewed increase in new orders. On the other hand, some service providers mentioned increased customer numbers, but many continued to note that high-interest rates and challenging economic conditions pressured client demand.

In October, businesses in the United States continued hiring additional workers, although the pace of employment growth was slightly slower than in September. Overall, the rate of employment growth was only marginal.

According to ChemAnalyst, as of the week ending on October 27, 2023, the price of DAA was established at USD 2090/MT on a FOB Texas basis. This price reflected a weekly increase of 3%.

The price of DAA is expected to experience an upward trend in the coming weeks for several reasons. Firstly, the price increase in the feedstock, Acetone, is a significant factor contributing to the anticipated rise in DAA prices. Secondly, the demand from downstream industries, specifically the paints and coatings sector, is expected to play a pivotal role in driving the price increase of DAA. DAA is a common solvent and additive in the formulation of paints and coatings. Therefore, rising feedstock costs and heightened demand from downstream sectors, especially paints and coatings, will likely result in an upward trajectory for DAA prices in the coming weeks.