Butyl Acetate Prices Decline Amid Inventory Surplus and Weak Demand, US Manufacturing Sees Modest Growth

Texas (USA): This week, the Butyl Acetate market experienced a downturn due to sufficient inventories meeting downstream demand, coupled with average consumption in the terminal market and weak enthusiasm for purchasing downstream products. Shipments of Butyl Acetate feedstock from enterprises were limited, leading to increased inventory levels and continuous reductions in factory quotations. Furthermore, the demand from the downstream industries like Acetate industries remained on the lower side leading to downstream inquires.

The US Manufacturing PMI was slightly revised down in June 2024 but still showed the highest reading in three months, indicating sectoral improvement. New orders rose for the second consecutive month, and production continued to increase, albeit at a slower pace. Employment saw its largest rise since late 2022. Business confidence fell to its lowest level in over a year and a half, reflecting muted client demand. Despite this, some manufacturers plan short-term shutdowns in June. Significant price increases are unlikely in the near term due to low prices for Butyl Acetate feedstock Acetic Acid and weak downstream demand.

Domestic Butyl Acetate plants are currently operating at optimum capacity to meet both domestic and international demand downstream. The upstream Acetic Acid market for Butyl Acetate has experienced fluctuations but is expected to stabilize. At the beginning of the week, the domestic Acetic Acid market for Butyl Acetate feedstock was strong, supported by external downstream procurement. However, average sentiment for downstream procurement of Butyl Acetate has weakened the market atmosphere.

US natural gas futures rose driven by forecasts of hotter temperatures this summer, which may increase electricity demand. This surge in demand for Butyl Acetate is compounded by producers cutting drilling budgets and reducing output earlier this year when prices hit record lows. The North American Electric Reliability Council's annual report warns of increased risks of energy shortages in Texas, New England, the Southwest, the Upper Midwest, British Columbia, and Saskatchewan if temperatures rise above expected levels. Furthermore, the Butyl Acetate demand from the international market like European market has seen increased market trends.

Demand from the Butyl Acetate industry remains stable, primarily driven by the construction sector. Total construction starts rose in June, with gains in non-residential and non-building starts, although residential starts slightly declined. Investors anticipate that the Federal Reserve may soon lower interest rates due to recent data trends. However, rising freight costs could complicate the Federal Reserve's goal of reducing inflation, potentially delaying the timing of the first-rate cuts.