Acetylene Prices Remain High Amid Strong Demand and Upstream Cost Pressures

Qingdao (China)- Throughout June, Acetylene prices in the Asian market remained elevated due to several key factors. Robust demand from the downstream PVC and metal fabrication industries has played a significant role, particularly as the construction sector continues to expand. Additionally, rising upstream crude oil prices, which saw a 6% increase in June due to OPEC+ production cuts and increased US summer fuel demand, have further contributed to higher production costs for Acetylene. Geopolitical tensions and severe weather risks, including potential conflicts in the Middle East and intensifying hurricanes, have also bolstered bullish sentiment in the oil market.

China's manufacturing sector witnessed substantial growth in Mid quarter of 2024, driven by accelerated production rates and increased new orders. This resulted in heightened efforts to procure materials to meet current and future production needs. The strong domestic and international demand, particularly in consumer goods, fueled significant output expansion. Furthermore, feedstock calcium carbide prices continued to increase in the region, reflecting a rise in downstream PVC firms' operating load rates, which climbed to 74.36%. This uptick in PVC sector activity has driven demand for calcium carbide, a crucial ingredient in PVC manufacturing, thereby impacting Acetylene prices.

Spot prices for most petrochemicals in Asia, including Acetylene, have sharply increased, driven by rising freight and container costs amid ongoing logistics challenges coinciding with a seasonal demand surge. Concurrently, Acetylene prices in India rose due to heightened demand from downstream PVC and other end-use industries, fueled by robust growth in the construction industry. In India, housing sales reached an 11-year high in the first half of 2024, totaling 173,000 units, with Mumbai and Kolkata leading in sales volume and growth rates. While heavy rainfall has disrupted construction activities in some areas, the tight supply, elevated freight charges, and strong demand have mitigated these effects, enabling Acetylene prices to maintain their upward trajectory. Market sentiment remains cautiously optimistic, bolstered by strong sales figures that indicate sustained demand for Acetylene, despite ongoing adjustments in response to affordability concerns in certain segments. The overall trading atmosphere has been characterized by robust procurement efforts to secure Acetylene, driven by the need to support continued industrial and construction activities.

As per ChemAnalyst, Acetylene prices will increase further due to the sustained demand for Acetylene as a key additive in the downstream PVC industry. With positive indicators in the global economy and continued industrial expansion, there is an anticipation of strong demand. The manufacturing sector is expected to continue improving, albeit at a slower pace, as demand and trading activities pick up. High feedstock prices are also expected to contribute to this upward price trend, keeping Acetylene in strong demand.