Amidst lackluster demand, Isophthalic Acid Prices Decline in Asia, Stabilizes in the USA in Early August

Busan, (South Korea): After witnessing a bullish rally in the previous month, Isophthalic Acid prices have cooled off in the first week of August 2024 across the Asian market in the backdrop of softened buying sentiments. The decline in upstream costs has further supported the downtrend in the prices of Isophthalic acid. Furthermore, the demand for Isophthalic acid remained lackluster, with many buyers in no rush to purchase arguing that sufficient stock levels and unfavorable margins. However, in the US market imported Isophthalic Acid prices have remained steady for around three weeks, as visibly waning demand prevented additional hikes from the global Isophthalic acid sellers.

According to the data, prices of Isophthalic acid have declined by USD 30/MT on a weekly basis across the South Korean market. The cost support from feedstock Meta-xylene was limited as its prices decreased in the recent weeks which weighed down the prices of Isophthalic acid in the domestic market. Furthermore, the domestic supply of Isophthalic acid has improved as several manufacturing firms have raised their operating rates. Moreover, South Korea's purchasing manufacturing index was observed in the expansion zone (i.e., above the threshold point), indicating an improvement in the output levels.

Additionally, the demand for Isophthalic acid from the downstream PET resin industry has relatively subdued as consumption from the key end-user notably the plastic and packaging sector was below seasonal expectations, leading to the downward shift in the price realization of Isophthalic acid in the domestic market. The spot market transactions were also flat as buyers were mainly seen on a need-to basis, and demand remains sluggish. In the broader economic context, South Korean inflation rose in July due to supply-side pressures and adverse weather conditions, ending a three-month streak of declines. The rise in the inflation rate has further worsened consumer buying sentiments. At the same time, export demand for Isophthalic acid has become relatively quiet, largely due to poor downstream affordability and macroeconomic headwinds. Despite this, South Korea's petrochemical exports increased by 18.5% year on year by value to $4.19 billion in July, supporting the overall growth in total shipments abroad.

On the other hand, compared with the previous week, Isophthalic acid prices have mainly stable to roll-over in the US market amidst supply disbalance. The inquiries from the downstream PET resin industry have been average with limited instances of new orders reported by market players in the given time frame. However, imports from the Asian market have been delayed at the US ports amid the port congestion in the key major routes in Asia. Furthermore, the freight charges from Asia to the US have remained elevated as deployed capacity remains tight. As per the market source, costs for shipping from Korea to the U.S. west coast gained 12.9 percent on-month, or 30.8 percent on-year, in June to 6.02 million won. Meanwhile, those to the U.S. East Coast also jumped 15.3 percent on-month, or 26.9 percent from a year earlier, to 6.02 million won. Currently, it had a minimal impact on the prices of Isophthalic acid but there is an expectation that the price might increase in the coming weeks. Overall, the market fundamentals of supply and demand were balanced, keeping the prices flat in the domestic market. Therefore, prices of Isophthalic acid CFR Texas were settled at USD 1500/MT on 2nd August.

In the short term, ChemAnalyst anticipates prices of Isophthalic acid might remain bearish across the Asian market in the expectation of a further decline in demand from the downstream derivative industry amid off-season dullness. The feedstock m-xylene prices are anticipated to decrease which may weaken the cost support for Isophthalic acid. However, the supply of Isophthalic acid is expected to reduce as several manufacturing firms may undergo maintenance turnaround. Freight charges from Asia to the US are anticipated to stay high until the Golden week which may lift the import prices of Isophthalic acid.