Belgian Ethyl Acetate Market Stabilizes in August with Optimised Supplies Amid Tepid Demand

The Ethyl Acetate market in Belgium has shown stability as of second week of August 2024, with sufficient stocks available to meet downstream demand. However, rising upstream methanol prices, as reported by Methanex, are expected to lead to higher cost of production for Ethyl Acetate in coming weeks.

In Europe, the construction industry continues to face significant labour shortages, with nearly half of the sector’s occupations in deficit. Despite this, the sector's Ethyl Acetate sustained demand stability, bolstered by increased foreign direct investment, which has contributed to the overall positive market sentiments. The Eurozone manufacturing activities held steady in July 2024, slightly revised from the preliminary estimate but still reflecting a weak manufacturing sector. Major Eurozone economies are experiencing accelerated downturns, with new orders of Ethyl Acetate contracting.  Ethyl Acetate factories are relying on backlogs to maintain output, while reduced demand has led to decreased employment and purchasing levels. At the same time, factories are cautious about passing on higher costs to clients.

The ongoing Israel-Hamas war has been continuously escalating tensions in the Red Sea, disrupting global supply chains Ethyl Acetate and causing bottlenecks, delays, and equipment shortages. This has resulted in an estimated 15-20% capacity loss on Far East to North Europe and Mediterranean routes during Q2. Efforts to mitigate these disruptions include faster sailing and added capacity, but war risk insurance premiums have been high.

Regional production for the product remained sturdy and optimised, particularly for the key consumer construction sector, helping to stabilize Ethyl Acetate prices despite the global disruptions. However, with the Red Sea crisis impacting global supply chains and leading to higher import values, domestic prices of Ethyl Acetate are stabilizing at elevated levels. Ocean freight rates from Asia to Europe have exceeded contract rates due to tighter vessel availability. The situation is further exacerbated by extended transit times and increased delivery costs resulting from rerouting around the Cape of Good Hope.

Demand from the downstream construction sector in Belgium remains subdued, impacting the Ethyl Acetate market negatively. The holiday season in Europe has led to decreased trading activity and lower downstream inquiries. Economic sentiment in Belgium has also dropped, with the value falling from 95.9 in June to 95.8 in July, as per the data released by Eurostat, remaining below the long-term average of 100. This decline is attributed to weak performance in the industrial and construction sectors.

Despite these challenges, potential price increases for Ethyl Acetate are expected due to rising feedstock methanol prices and the possibility of supply crunches in the market.