For the Quarter Ending June 2021
The supply of Propionic Acid in the North American region recovered from the impact of the polar winter storm Uri, after several manufacturers ramped up operations to replenish the inventory levels which got disrupted due to winter storm in Q1. As a ripple effect, 90% of the total Propionic Acid capacity restored in the US which eased the overall market outlook in the North American region. Demand remained balanced from the downstream food and preservatives industries and export market recovered despite persistent logistic constraints. The market sentiments were bolstered by traders replenishing the inventories levels ahead of the upcoming hurricane season in the US Gulf region. As a ripple effect, Propionic Acid prices in the North American region were stabilized with FOB Louisiana discussions in June settling at USD 1200 per tonne.
The Propionic Acid demand outlook was bolstered in the Indian market as several downstream buyers from the food and preservatives sector increased purchasing activities at the start of the second quarter. Demand remained uncertain due to COVID lockdown extension in several Asian economies. Supply outlook in the Asia Pacific region were bolstered as the recovery in the US supplies curtailed the Asian cargoes to the western regions. Propionic Acid demand stood majorly focused on the food and preservatives sector during the second quarter, but limited availability kept the offers considerably raised. Propionic Acid ex-works discussions in India were assessed at USD 1514 per tonne in June.
Overall Propionic Acid market outlook in the European region stood balanced during the second quarter of 2021. Regional supplies faced constraints despite improved volumes from the USA. At the start of Q2, the Asian cargoes were delayed due to the Suez Canal blockage. The extended supply demand imbalance since the previous quarter led to an increment of USD 189 per tonne in regional offers of Propionic Acid from Perstorp in June. Demand remained consistent throughout the quarter amid stable enquiries from the food and preservatives sector.
For the Quarter Ending March 2021
Propionic Acid supplies in the region were constrained during the first quarter of 2021, due to the sub-zero temperate in the USA gulf region which disrupted the power supply for several chemical plants, forcing them to declare force majeures for indefinite period. High enquiries to produce pharmaceuticals, food and feed preservatives and plastics, supported the demand side throughout the quarter but tight supplies surged the prices of Propionic Acid in the US market by around USD 210/ton in first quarter taking the price for April deliveries at USD 1200/ton levels.
During the first quarter of 2021, Propionic Acid supplies in the Asia pacific region were improved in comparison to the previous quarter, owing to the commissioning of new plants in China. However, some supply related constraints were witnessed as imports were gradually decreased from the USA and stalled production in the mid of the quarter due to Chinese lunar new year holidays. Feeble demand from the food preservative sector products due to the resurgence of second COVID wave, followed by the uncertainties of the lockdown in southeast Asian region dented some demand. The FOB prices of Propionic acid in China Tianjin province surged by USD 80/ton to USD 1090/ton in March.
The European Propionic Acid market seemed tight during the first quarter as the plants were operating at low efficiencies due to the severe cold weather in the northwest European region, followed by the reduced imports from the USA. Demand remained pressured from the downstream food preservative sector, as major economies in the region implemented strict lockdowns amid resurgence of COVID-19 cases in the region.
For the Quarter Ending December 2020
The Asian Propionic Acid market experienced both ups and downs during Q4 2020. Initially during October, the CFR SEA price rose to around USD 900/tonne as an effect of rise in demand due to festive season especially in India. But later till the end of the quarter, the prices dropped to USD 850 USD/tonne levels due to fall in demand due to the year-end seasonal lull. The prices of feedstock ethylene were rising due to increasing demand and tight supply while most of the demand was coming from the packaging sector.
In the fourth quarter of 2020, Europe was suffering from the second wave of COVID-19 infections. Manufacturers across the region were handling restricted movement and shortage of the feedstock Ethylene leading to tight regional supplies simultaneously. These conditions drove the prices of Propionic Acid to rise slightly in Germany and Spain initially in October. Extending sharp market gains to its end customers, BASF announced an increase in the prices of Propionic Acid products in November 2020. However, later during December, the prices again dropped by around 5% and came down to the previous levels.
North America faced multiple hurricanes between Q3 2020 and Q4 2020 which capped the Propionic Acid production levels. During October 2020, due to hurricane Laura, more than 90% of the total output of the gulf of the US remained affected which led to mass shortage of feedstock Ethylene. A number of factors complemented the slight rise in the prices of Propionic Acid in Mexico region during November 2020. But later in December the prices came back to normal again when the feedstock supplies started reaching to normalcy.