For the Quarter Ending December 2023
During the fourth quarter of 2023, the North American market for Isothiazolinone witnessed a decline in prices amidst muted downstream demand from the paint and coating segments.
This quarterly reduction was driven by reduced demand from the regional market and a high-supplied market. The USA's automotive industry experienced limited demand due to a sluggish economic recovery and stagnant trading conditions in the construction segment. In anticipation of an impending price increase resulting from a new import tariff, buyers temporarily halted their purchasing activities during this period. Furthermore, international factors, including the Russia-Ukraine war and a drought affecting the Panama Canal, added complexity to the international container logistics in the USA during the last quarter of the year.
In response to a significant drop in the spot export prices compared to contracted prices, US buyers actively engaged in discussions regarding potential reductions in the Isothiazolinone prices. Additionally, the disruptions in US shipping caused by Panama Canal issues and the ongoing decline in crude oil values also played a role in influencing pricing dynamics in the North American market during this period.
The pricing of Isothiazolinone in the APAC region was influenced by various factors during the fourth quarter of 2023. Initially, a bearish trend prevailed in the market, primarily because of diminished demand from both domestic and international markets. The oversupply situation worsened the pricing dynamics, resulting in a decline in prices. Additionally, the sluggish economic recovery and weak manufacturing activities in the region contributed to the overall low demand for Isothiazolinone. When examining specific country scenarios, China underwent the most significant price changes during this quarter. The Chinese economy faced challenges, and government efforts to stimulate growth had limited impact on the market. Domestic demand for Isothiazolinone remained low, while international consumption played a more significant role in influencing the price trend. The Lunar holidays in China provided temporary relief, but a long-term rebound in the market was still anticipated. These downward price fluctuations were mainly driven by destocking practices and low domestic demand, and no potential improvements have been seen in economic activities in the construction sector throughout the quarter. In conclusion, Isothiazolinone pricing in the APAC region during the fourth quarter of 2023 was influenced by bearish downstream market conditions, low regional demand, and oversupply. China experienced significant price changes, with fluctuations driven by domestic and international demand dynamics. The latest price for Isothiazolinone MIT 14% FOB Shanghai in China for December 2023 was USD 1700/MT.
In the fourth quarter of 2023, the European Isothiazolinone market experienced a balanced scenario characterized by moderate to high supply and modest demand in the region. The downstream paint and coating segment exhibited marginal momentum amid elevated interest rates and sluggish international off-takes, influencing commodity prices. Limited downstream demand and a cautious approach among market participants led to product price stagnancy in Germany during October. European traders and manufacturers were primarily concerned about diminished demand from the downstream industry, leading to only modest price fluctuations despite worries about disruptions in freight towards the end of the quarter. Another noteworthy aspect was the ample availability of inventories, further contributing to the negative impact on prices. The strategy of reducing operating rates to safeguard profit margins for producers and traders proved ineffective in boosting margins, given the competitive pressures from the import market. Despite production cutbacks, the Isothiazolinone market consistently faced challenges due to low downstream demand in the fourth quarter of 2023. The European Isothiazolinone market notably outperformed its global counterparts, prompting import suppliers to redirect shipments to the region during the global market downturn in the last quarter of 2023.
For the Quarter Ending September 2023
In the United States, the Isothiazolinone price trend displayed an overall downward trend in the quarter ending September 2023 due to a decline in consumer purchasing sentiment amid increasing inflationary pressure on the downstream market momentum. Additionally, the downstream sector's demand from the coating industry faced significant challenges related to production as a rise in crude oil values threatened to reduce monthly in the third quarter of 2023. The cosmetics and personal care demand remained muted on account of seasonal dullness in the North American market. Hence, the decline in the price of Isothiazolinone was primarily prompted by the narrowed demand amidst a high level of pre-stocked inventories. Moreover, regional inquiries for the product had been consistently decreasing since the end of August 2023, leading to reduced pricing movement for Isothiazolinone in the quarter ending September 2023. The prices of the product this quarter were the result of ample supplies and elevated uncertainty in regional market increment along with delayed procurement sentiments amongst the consumers.
According to the most recent analysis, the Isothiazolinone prices in the quarter ending in September 2023 witnessed a decline in the APAC market, primarily driven by abundant supplies to meet the existing orders in both domestic and regional markets. Additionally, the adverse impact of a typhoon in the country had a dual effect and led to reduced downstream operational rates in line with the constrained regional demand for the product in August 2023. A decline in export inquiries for the product was prompted by the reduced enthusiasm in the international market amid elevated economic uncertainty in China during the third quarter of 2023. As September progressed, the downstream businesses concluded their pre-holiday stocking, resulting in muted demand by the end of the month. Consequently, the current decline in the prices of Isothiazolinone was prompted by the stagnation in downstream paints and coating demand and the high level of stocks to fulfill marginal orders in the Asian market, particularly at the close of September 2023.
In the third quarter of 2023, the pricing of Isothiazolinone in the European market exhibited a notable decline and primarily resulted from the reduced regional procurement activities and subdued demand from downstream sectors. This decrease in procurement, coinciding with a backdrop of heightened interest rates, resulted in a visible reduction in product consumption within the initial half of the quarter across various downstream industries. On the supply side, the pricing trajectory of the product was significantly influenced by lower operational costs observed in August 2023. Additionally, a decrease in input pressure catalyzed heightened production activities within the Eurozone market, thereby impacting the pricing dynamics of Isothiazolinone in the middle of the quarter. Furthermore, the extended summer breaks taken by businesses and consumers across Europe prompted a more cautious approach, leading to an increase in pre-purchasing activities in anticipation of the upcoming months. Despite the prevailing volatility in crude oil prices, there was an underlying expectation of a reduction in core inflation and raised concerns about the uncertainty in the downstream market and the overall offtakes in the Eurozone during this quarter.