Belgian Acetic Acid Market Experiences Price Hikes Amid High Input Costs and Supply Disruptions

Antwerp, Belgium: The Belgian Acetic Acid market remains stable, with domestic production effectively meeting downstream demand. However, there are concerns about potential price hikes due to increasing costs of Methanol, a key feedstock for Acetic Acid. This is anticipated to impact the value chain in the upcoming weeks, leading to a rise in Acetic Acid prices in Belgium, primarily used in the construction industry for producing ethyl and butyl acetate. As of now, the Acetic Acid prices have maintained stability with prices ranging from USD 815-880 Per MT FD Antwerp.

Despite a slowdown in the Eurozone manufacturing sector, Belgium's construction sector is thriving. The sector is bolstered by increased foreign direct investment and positive market sentiment, resulting in sustained demand. However, this growth is challenged by a significant labour shortage, with nearly half of the construction-related jobs lacking qualified workers.

The ongoing conflict in the Red Sea presents a substantial threat to global shipping. This crisis has caused bottlenecks, delays, and equipment shortages, leading to an estimated industry-wide capacity loss on the Far East to Europe and Mediterranean routes. Efforts are being made to increase capacity and shorten transit times, but war risk insurance premiums have surged as a result.

Domestic plants in Belgium are operating at full capacity to meet the downstream demand for Acetic Acid, ensuring a stable supply. However, the Red Sea crisis disrupts global supply chains, particularly in Asia, leading to higher Acetic Acid import costs and stabilizing domestic inventory prices at a higher level. Robust domestic production helps keep methanol prices relatively stable, especially for the construction sector. Nonetheless, the Houthi activity in the Red Sea poses a risk of further price increases. Consequently, due to higher freight rates, Acetic Acid imported from China, a major exporter to Belgium, have seen price rise.

The Belgian construction sector’s strong demand for ethyl acetate and butyl acetate, used in the paints and coatings sector, continues to flourish. The European Central Bank’s recent 25 basis point interest rate cut, lowering the deposit rate to 3.75%, is expected to reduce mortgage rates, further boosting market sentiment in the construction sector.

The sharp increase in Belgian housing stock is partly due to high levels of Acetic Acid downstream activity in the construction sector for vacation homes along the coast. This could potentially overestimate the availability of primary residences. As per ChemAnalyst, the Acetic Acid prices in the Belgium market are expected to increase amid firm demand from the downstream industry like Acetate.  Additionally, the price of feedstock Methanol is likely to increase leading to a rise in prices of Acetic Acid through the value chain.