For the Quarter Ending September 2023
Overall, the 2-EHA (2-Ethylhexanoic Acid) market in the USA remained weak compared with the second quarter. However, marginal fluctuations have been observed during this timeframe, where the prices of 2-EHA admitted a general hike of +2.3% during July. As per Fred Economic data, total vehicle sales in the US increased from 16.195 (June) to 16.318 (July) which has surged the demand for 2-EHA from the downstream paints and coating industry. Moreover, the USA construction and automotive sector was improving during this timeframe as the market players approached an optimistic trading atmosphere. Conversely, the market sentiments have declined by -4.2 % to settle at 2629 USD/tonne 2-EHA CFR New York, USA during August amid the cheaper imports from Germany. Despite the increase in the feedstock propylene prices in the USA due to the unplanned shutdown at Dow Chemical and BASF Total Energies Petrochemicals in Texas, the prices of 2-EHA in the USA have remained unaffected due to muted demand for the product within September. Therefore, the rollover demand from the international market asserted the market players to keep the prices of 2-EHA unchanged.
Compared with the second quarter, the 2-EHA prices in Asia remained low during the third quarter as the downturn prices of 2-EHA in Japan were observed during July by -6.5% due to muted demand from importing countries like India and Taiwan. Hence, to remain relevant in the market, Japanese traders had to decrease their posted prices for 2-EHA cargoes, which contributed to the overall descending trend in 2-EHA prices. Similarly, by analysing the demand for the product, few manufacturers in Japan put their upstream propylene plant including ENEOS Corp in Sakai on maintenance shutdown having capacity of 100,000 mt/year till the end of August. This has further supported the downtrend in the Asian market to settle at 1319 USD/tonne 2-EHA FOB Tokyo, Japan during August. However, the market dynamics of Asia took a sharp upturn in September on the back of supply disruption. The unexpected plant shutdown of a propylene feedstock unit in Yokkaichi, Japan has unsettled the supply of 2-EHA, which has resulted in a sudden decline in the availability of raw materials and hence surge the market prices by +3% during this timeframe.
The 2-EHA market in Europe remained weak in the third quarter of 2023, but there were some marginal fluctuations observed during this timeframe. The pricing dynamics of 2-EHA witnessed a hike of +2.4% under the influence of improved demand from the international market. Hence, to cater to the increasing demand from the downstream paints and coating industry, the European manufacturers increases their production unit of 2-EHA, which further supported the price trajectory. However, the 2-EHA prices admitted a bearish trend during August amid modest demand from the downstream automotive industry. As per National Bank of Belgium Online Statistics, the CPI persisted at 4.1 points during August, whose impact on the export prices of 2-EHA remained unaffected. Therefore, to remain competitive and sustain their offtakes in the market, the European traders decreased their posted prices of the product to settle at USD 2507/MT 2-EHA FOB Antwerp, Belgium during this timeframe. In the meantime, the unchanged demand for 2-EHA from the downstream automotive industry in the USA during September kept the prices of the German markets to remain even.
The 2-EHA market in the Brazil was weaker in the third quarter of 2023 than in the second quarter, but prices went up slightly in July by +2.4% under the influence of new queries from the USA downstream automotive market. Despite, the CPI inclination in Brazil by 0.12% during July quoted by Instituto Brasileiro de Geografia e Estatística, the growing demand from the downstream construction material sector along with the requirements for solvents in Paints, drove the product demand toward positive buying sentiments amongst traders. Therefore, the new orders for 2-EHA from USA kept on rising which influenced the market dynamics of Brazil to showcase an uptrend during July. However, The 2-EHA prices in Brazil declined in August to maintain their offtakes in the market. The market players of Europe have eased down the prices and hence to compete with the international market, Brazilian traders have revised their quotations negatively. Afterwards, the Brazilian market of 2-EHA admitted immense stability during September amid no major development in the market fundamentals observed in the given timeframe.
For the Quarter Ending June 2023
During the second quarter, overall, the 2-Ethylhexanoic Acid (2-EHA) market in the US declined compared with the first quarter. The uptrend of 2-EHA prices has been observed during April, followed by the first quarter amid an increase in industrial activities within the US. According to the data, the Industrial Production Total Index in the US rose from 102.6 (May) to 103.1 (April), contributing towards the recovery in economic condition. The global plasticizer demand awakened during the spring season. Moreover, the absence of significant shipping and transportation disruption led to robust pricing. Weaker feedstock propylene prices prompted the production cost of 2-EHA to reduce during June, followed by May. Furthermore, supplies in the regional market rose significantly in the wake of limited buyer interest in bulk purchases. The key factor for the fall in 2-EHA prices is the weaker demand for materials in the downstream construction industry, including Paints and plasticizers. The downturn of 2-EHA prices is closely correlated with feedstock prices to settle within 739 USD/ tonne Propylene Polymer Grade DEL US Gulf, USA during June.
During the second quarter, 2-Ethylhexanoic Acid (2-EHA) prices experienced a continuous downturn, followed by the first quarter. A significant drop in 2-EHA China prices was observed during April amid subdued demand from the downstream construction industry, including plasticizers. According to the NBS data, PMI for China fell marginally from 95.3 (April 2023) to 94.1 (May 2023), depicting industrial activities to be low. Majorly declining upstream propylene prices within the quarter supported the downturn in product prices. Due to the muted demand, low upstream propylene prices have made the manufacturers produce fewer products. This has led to a decrease in the supply of 2-EHA, which in turn decreases the demand. Several production units for propylene have been turned down during May and June amid muted demand from the downstream industry, including PetroChina in Lanzhou, Jiangsu Yanchang Zhongran Chemical, and Mitsui Chemicals in Chiba, Japan. 2-EHA has been readily available in the Asian market, including China, Japan, and Malaysia, at a lower cost, which has been pressuring Asian key players to revise their offers negatively.
The average pricing trend of 2-Ethylhexanoic Acid (2-EHA) during the second quarter in the European market declined compared with the first quarter. Despite the low upstream propylene prices, the 2-EHA market has grown amid Paint and cosmetics manufacturers showing typical interest in acquiring 2-EHA for their manufacturing requirements during April. Moreover, the significant shipping transport disruption rebounded the price trend. However, the Price trend for feedstock propylene correlated with 2-EHA during the second half of the quarter. Low feedstock propylene prices have made it less profitable to produce 2-EHA, so producers have made less of it. Moreover, decreased demand for the product dragged down by the downstream construction material manufacturing industry declined the overall market trend within Europe. According to the data, Producer prices in the Industry of Belgium fell from 163.7 (April) to 161.3 (May), which influenced the production unit to be sluggish during this timeframe. Henceforth, the muted demand from importing countries like the United States further supported the price trend during June. The prime reason for the fall in the values of 2-EHA within Europe is the waning demand for materials in downstream industries.
During the second quarter, the overall 2-Ethylhexanoic Acid (2-EHA) market in Brazil declined compared with the first quarter. However, the uptrend of 2-EHA prices has been observed during April, followed by the first quarter amid an increase in product demand for downstream paints and coating additives. The price trend in Brazil correlates with the demand for the product in the USA, an importer country. Hence, surged prices in Brazil were supported by the US product's demand. As per the data, export prices in Brazil increased from 124.84 (March) to 125.60 (April), which has contributed to the expensive freight charges. This has further surged the prices of 2-EHA during April. On the contrary, low feedstock propylene prices during May and June drove the production cost for 2-EHA to be low. The downturn of 2-EHA prices was closely correlated with feedstock prices to settle within 2629 USD/ tonne 2-EHA FOB Manaus (Brazil)during June. Moreover, according to the data, Brazil's Composite PMI fell to 51.5 in June of 2023 from 52.3 in the previous month's contraction for the manufacturing sector for 2-EHA, along with the decline in export prices. Muted economic activities and low demand hampered the prices to showcase a downtrend.
In the US, on the back of rising cost support and firm demand sentiment, 2-Ethyl hexanoic Acid prices have risen consistently throughout the first quarter of 2023. 2-Ethyl hexanol, the feedstock of 2-Ethy hexanoic Acid, prices constantly throughout the quarter which kept the cost pressure on the prices. Meanwhile, demand from the plasticizers industry sharply increased, which culminated in ample new orders and inquiries for the product. Despite the economic headwinds in the US, petrochemical remained largely unscathed in the first quarter. Thus, after the conclusion of the first quarter of 2023, 2-Ethyl Hexanoic Acid prices were assessed at USD 2855 per MT.
In the Chinese market, 2-Ethyl Hexanoic Acid prices declined consistently in the first quarter of 2023 on the back of weak cost pressure from the feedstock market and stagnant to sluggish demand sentiment. Feedstock 2-Ethyl Hexanol prices dropped for a major part of the quarter which resulted in soft cost support, and consequently, prices remained weak. Meanwhile, demand from the downstream paints & coatings segment remained largely stable as the construction industry faced an off-season lull while consumption from plasticizers increased during the quarter. Thus, after the conclusion of March 2023, 2-Ethyl Hexanoic prices in China were assessed at USD 2400 per MT on a FOB basis.
In the European region, 2-Ethyl Hexanoic Acid prices constantly rose throughout Q1 on the back of firm cost support from 2-Ethyl Hexanol and stable demand from downstream industries. The plasticizers industry witnessed improvements after sluggish Q4 2022, which culminated in increased consumption rates of 2-Ethyl Hexanoic Acid. However, demand from the paints and coatings industry remained sluggish due to the off-season for the construction industry amid economic headwinds in the European continent. Meanwhile, Europe reported a stable flow of imports from the Asian market as the freight market remained bearish. Thus, after the conclusion of the first quarter, 2-Ethyl hexanoic Acid prices were assessed at USD 2770 per MT.