As February progresses, the international market for Benzoic Acid prepares for a notable escalation in prices, driven by a multitude of factors set to influence the industry during the latter two months of the first quarter of 2024. Throughout the Asia-Pacific (APAC), North American, and European territories, a confluence of circumstances, spanning from facility closures to geopolitical uncertainties, is anticipated to propel Benzoic Acid prices upward, placing strain on supply chains and market conditions.

In the APAC region, the escalation of Benzoic Acid prices is primarily attributed to the shutdowns of major plants of its raw material Toluene in prominent exporting provinces. These Toluene plant shutdowns have rendered manufacturing units nonoperational as they undergo maintenance, resulting in a reduction in supply making the Benzoic Acid market robust. Moreover, the occurrence of celebrations like the Chinese Lunar New Year in mid-February has further aggravated the scenario, resulting in additional shutdowns of manufacturing facilities and disturbances in the production processes of Toluene and Benzoic Acid.

According to ChemAnalyst, there have been reports of shutdowns of Toluene plants in China in recent weeks mentioned below:

The OPEC+ production policy meeting outcomes fell short of market expectations, with production cuts not meeting anticipated levels. Market negotiations were generally lively, leading major units to increase their listed prices. The resulting supply constraints of Benzoic Acid have contributed to the upward trajectory of prices in the region.

Similarly, in the North American and European regions, Benzoic Acid prices have witnessed a substantial uptick, driven by a combination of factors. Raw material Toluene and Benzoic Acid prices in the US market increased due to the sustained rise in demand. Additionally, oil traders are closely monitoring efforts to negotiate a ceasefire in Gaza and any signs of increased U.S. military involvement in the Middle East. The United Nations trade body has cautioned that escalating attacks on vessels in the Red Sea are exacerbating challenges for shipping routes already affected by conflicts and climate-related issues. The combination of incidents in the Red Sea, geopolitical tensions impacting Black Sea shipping, and the effects of climate change on the Panama Canal has resulted in a complex crisis affecting crucial trade routes.

The demand outlook for the downstream sector likely to remain strong throughout Q1 2024, with the repercussions reflected in domestic market Benzoic Acid prices. Moreover, the supply chain remained tight from the raw material sector as two of the major manufacturers of Toluene (ExxonMobil Corporation and the Dow Chemical Company) were under Force Majeure due to subfreezing weather conditions leading to a limited supply chain further adding cost providing cost support to the Benzoic Acid market in the US region.

According to ChemAnalyst, there have been reports of shutdowns of Toluene plants in the United States in recent weeks mentioned below:

In the European market, there has been a notable trend of currency volatility, specifically marked by a 2.12% devaluation of the Euro against the USD in January 2024, with a subsequent ongoing decrease of 0.08% into February. This fluctuation has contributed to an escalation in export costs for Benzoic Acid products. Additionally, the surge in raw material costs, particularly Toluene, has provided further impetus to the upward price trajectory for Benzoic Acid, underscoring the multifaceted nature of the challenges confronting the industry.

The Federal Association of Offshore Wind Energy (BWO) in Germany has raised concerns about the inadequacy of the country's port capacity to achieve existing goals. Together with the Central Association of German Seaport Companies (ZDS), they have urged for enhanced collaboration with the federal government to swiftly address and finance the necessary expansion.

As per chemanalyst, the Benzoic Acid market is expected to experience significant price hikes in February 2024, driven by a complex interplay of factors spanning from plant shutdowns to geopolitical tensions, which are poised to reshape the industry landscape in the coming months.