Asian Anisole Prices Continue to Soar Amid Rising Demand and Upstream Cost Pressures

In August, the prices of Anisole continued to gain upward momentum in the domestic market of China. The surge in demand for Anisole from terminal industries like perfumes and dyes has been a primary driver of price increases. As these sectors expanded and required more Anisole for their products, the overall market demand has outpaced supply. Despite consistent production levels by manufacturing firms, the increased demand has created upward pressure on the prices of Anisole.

On the upstream front, phenol prices have climbed upward, further supporting the Anisole prices to increase in the domestic market. The phenol market kept rising due to the limited availability of the material. The market's tight supply position remained favourable, as traders expressed strong support for price hikes and producers raised prices as a result.

While the business outlook remained positive, China's economic output grew in July. However, seasonal factors including heat waves and floods somewhat hindered the expansion. According to the National Bureau of Statistics, the composite PMI output index in July was 50.2 which was slightly lower than 50.5 in June. The PMI for manufacturing decreased a little to 49.4, while the PMI for the construction and service industries as a whole declined to 50.2.

A similar trend was observed in the prices of Anisole in the Indian domestic market. Buyers in the downstream perfume and dye sectors have been actively purchasing larger quantities of Anisole to meet their immediate needs. This heightened buying activity has contributed to the upward price trend. The combination of rising demand, adequate supply, and increased transaction activity has created a favourable environment for Anisole price increases. While the market remained well-supplied, the growing demand from downstream industries has outweighed the current production levels, leading to price adjustments.

Considering upstream, the prices of Phenol have increased in the domestic market of India. Also, oil prices rose as concerns over Libyan production reappeared. However, these gains were offset by a lesser-than-expected decline in U.S. oil stocks, which dimmed demand estimates. On the other side, freight charges have remained on the higher end, leading to higher costs of Anisole. Freight to the west coast had decreased by 20% from their July peak due to increased carrier capacity and potential peak demand. However, freight costs rebounded by over 10% for the week ending 23rd August following mid-month General Rate Increases (GRIs) implemented by some carriers.

According to ChemAnalyst analysis, Anisole prices are likely to remain on the higher side amid a limited supply of finished stocks. On the upstream front, prices of upstream Phenol may continue to rise leading to higher production costs of Anisole in the domestic market. Consumer sentiments will improve thus strengthening of the market is anticipated.