For the Quarter Ending June 2023
North America
The Mineral Turpentine Oil (MTO) market has been fluctuating throughout this quarter in the North American region. Growing inflationary pressure and global economic slowdown caused the government to raise interest rates high. This further weakened the buying enthusiasm of the bulk consumers during this time frame. The collapse of two major banks in the US further caused disruptions in many construction projects. Many construction projects were either canceled or delayed due to the bank shutdown. However, a revision in orders from the construction sector was recorded by the beginning of June 2023. Further, fluctuation in prices of upstream Crude Oil also impacted the prevailing price trend. As indicated by FRED the Purchasing Managers Index of the country has depreciated throughout the second quarter, while the US consumer price Index rose. The CPI of the US rose by a margin of 0.3% in June from the preceding month May 2023. These declining economic indicators indicated towards slow economic activity consequently affecting the demand for MTO globally.
APAC
Pessimistic market sentiments for Mineral Turpentine Oil prevail in the Asian region. Fluctuating prices of upstream Crude Oil and depreciating demand from the downstream paints and coatings industry were the key factors attributing towards the decline in prices of the product. The construction sector a significant consumer of MTO for paints and coatings, faced sluggish demand during this period. The prices have shown a significant dip in the Indian market during this quarter and were recorded at INR 77200/MT in June 2023. Further, China’s construction sector has been observing a downturn since April 2023 due to a weaker-than-expected property sector. Further, amidst the global economic slowdown and growing inflationary pressure, consumers from the property sector remained hesitant to make purchases. Additionally, OPEC-led Saudi Arabia declared at the beginning of this quarter that it would reduce crude oil output by 500 Mb/d for the rest of the year. This action from Saudi Arabia has also impacted the price of Mineral Turpentine Oil globally. As indicated by the National Bureau of Statistics China, the Purchasing Manager Index is declining and has been recorded at 48.8 in May 2023 after a marginal decline of 0.8% from the previous month along with a decrease in industrial growth rate from 5.6 in April 2023 to 3.5 in May 2023. These declining economic indicators hinted towards reduced economic activity, potentially affecting MTO demand.
Europe
Prices of Mineral Turpentine Oil declined in European market throughout the second quarter in the wake of declining raw material prices and depreciating demand from the end-user market. Further, hiked interest rates in the country further weakened the buying enthusiasm of the consumers. Lack of procurement orders for paints and coatings from the construction sector further supported the prevailing price trend. Additionally, disruptions in supply chains were observed due to ongoing strike in France consequently leading to stockpiled inventories in the country. Inflation in Germany has slowed down to 5.6% in June from 6.1% in May but is still above the average level. Further, as per data from the German Federal Statistical Office, the Consumers Price Index declined by 0.1% in May from the previous month. Additionally, as per data from Eurostat, the Producers’ Price Index of the region declined to 138.3 in May from 143.4 in March and is expected to decline further. The average decline was 3.6%. These declining economic indicators hinted towards reduced economic activity, potentially affecting MTO demand.
For the Quarter Ending March 2023
North America
During Q1 2023, prices of Mineral Turpentine Oil (MTO) kept on fluctuating in the North American market, where demand fundamentals remained low from the domestic downstream sectors, and prices were primarily driven by orders from the international market. Data reveals that the downstream industries like automotive, paints, and adhesives showed some improvement by the end of the quarter but remained below expectations due to prolonged inflationary pressure. Furthermore, the FED's frequent price revisions on domestic interest rates were contributing to concerns about the country's economy and affecting demand for the product.
Asia
The price of Mineral Turpentine Oil (MTO) in India decreased by 2.4% in March 2023 compared to the previous month, despite the seasonal increase in demand from downstream industries. The low demand in the international market also affected the prices of imported cargo. In February 2023, the product's price had increased by 3% due to high demand from downstream industries and the country's better economic performance compared to major economies. The market situation was bullish in February and bearish in March, with moderate supplies and low demand. It is expected that prices may rise further in the coming month due to high demand.
Europe
The European economy kept on underperforming due to the Russia-Ukraine war, which has put pressure on regional economic activities. As per data, demand for MTO from the domestic automotive sector has remained low, while other sectors, such as adhesive and paints, have also experienced a seasonal slowdown. Despite some disruptions in the supply chain caused by snow, supplies remained stable to firm, and the narrow demand-supply gap supported a downward price trend. The reduced risk of a recession generated optimism for future demand.
The fourth quarter of 2022 got off to a steady start for the US Mineral Turpentine Oil (MTO) market; its prices increased greatly at the beginning of the quarter before declining as the end of the quarter drew near. The market price of MTO fluctuated in response to changes in downstream demand from various industries. Due to the unstable market conditions for the downstream paints and varnishes industries throughout the quarter, the demand for Mineral Turpentine oil in the domestic market fluctuated. Variable manufacturing costs and varying upstream expenses also had an impact on the Mineral Turpentine Oil market's growth throughout the quarter and affected the market's overall pricing.
The Asia-Pacific Mineral Turpentine Oil (MTO) market had a good start to the fourth quarter of 2022; its value rose significantly at the start of the quarter before falling as the end of the quarter drew closer. In response to variations in downstream demand from various industries, the market price of MTO changed. The demand for Mineral Turpentine Oil in the domestic market varied during the quarter because of the fluctuating market circumstances for the downstream paints and varnishes sectors. The Mineral Turpentine Oil market's growth throughout the quarter was impacted by fluctuating manufacturing prices and fluctuating upstream costs, which also influenced the MTO market's total pricing.
For the European Mineral Turpentine Oil (MTO) market, the fourth quarter of 2022 got off to a strong start; its prices rose significantly in the first half of the quarter before falling as the conclusion of the quarter drew closer. The downstream demand from various industries changed, which caused changes in the market price of MTO. Throughout the quarter, demand for Mineral Turpentine Oil in the domestic market fluctuated because of the altering market conditions for the downstream paints and varnishes sectors. Shifting upstream costs and shifting manufacturing prices, which also had an impact on the total pricing of the MTO market, hampered the growth of the Mineral Turpentine Oil market during the quarter.
