Global 2-EHA Market Experiences Significant Surge Driven by Robust Downstream Demand

The global market for 2-Ethylhexanoic Acid (2-EHA) experienced a significant surge during the week ending 2nd August. This increase is largely due to strong demand from the major downstream paints and coatings industry. Additionally, rising prices for the essential raw material propylene during the same period led to higher production rates, which in turn exerted upward pressure on 2-EHA prices.

In the North American market, the 2-EHA market saw a slight increase in prices following a period of stagnancy in the preceding week. This modest price rise is primarily attributable to elevated global freight charges, which have increased the cost of imports, especially from Asian countries. Although there are signs of easing congestion, its lingering effects, combined with tropical storms in the region, have compounded the supply challenges. These disruptions have contributed to a tighter supply situation, thereby influencing global 2-EHA prices. Additionally, while demand for 2-EHA from the downstream paints and coatings industry has remained modest, a moderately strong performance in the automotive sector where 2-EHA is a key component in automotive paints and coating has boosted demand.

The two-wheeler (2W) segment, in particular, experienced notable growth. This can be attributed to several factors, including a flourishing rural economy, favourable effects of the monsoon, and government support programs aimed at increasing rural incomes. Additionally, a rise in electric vehicle (EV) sales, driven by discounts and the upcoming deadline for the Electric Mobility Promotion Scheme (EMPS). Passenger vehicle (PV) sales also demonstrated a robust performance, with a substantial 14% growth during this period. This increase was fuelled by the introduction of new models and attractive pricing strategies employed by manufacturers. The strong performance across these automotive segments has consequently driven up the demand for 2-EHA, a crucial ingredient in automotive paints and coatings.

Similarly, the Chinese 2-EHA market saw a significant surge of 2.2%. This surge can be attributed in part to a material shortage within the Chinese market, resulting from reduced production rates amid the challenging weather conditions within the region.  Demand for 2-EHA from the downstream paints and coatings sector was modest. Although July traditionally marks the off-season for car sales, the overall performance of the market remained stable. Notably, Tesla reported strong sales figures, wholesaling an estimated 74,117 Model 3 sedans and Model Y sport utility vehicles last month, according to preliminary data released by China’s Passenger Car Association. This robust performance by Tesla indicates a resilient demand within the automotive sector, which in turn supports the continued demand for 2-EHA.

 Meanwhile, the international market demonstrated a positive buying sentiment. According to data from the National Bureau of Statistics of China, the export order index rose from 48.3 in June 2024 to 48.5 in July 2024, with further growth anticipated in August.

According to ChemAnalyst, global prices for 2-EHA are expected to decline in the coming months. This forecast is mainly due to an anticipated decrease in purchasing activity during the monsoon season, which traditionally weakens demand. Additionally, a potential reduction in the cost of raw materials is likely to contribute to lower 2-EHA prices, as decreased input costs often result in corresponding reductions in the prices of finished products.