Hamburg (Germany): Till the mid of July 2024, Ethyl Acetate market in Germany has remained stable, with current stock levels sufficiently meeting downstream demand. However, Methanex has reported a monthly increase in Methanol prices, which is expected to impact the value chain and potentially drive-up Ethyl Acetate prices soon.

The European Ethyl Acetate downstream construction industry continues to grapple with a significant labour shortage, with nearly half of the sector's jobs unfilled.  Germany’s Manufacturing PMI showed little change in June 2024 compared to May, indicating a fresh setback for the sector. Contraction rates in output and new orders have accelerated, and the destocking cycle continues with firms reporting deeper declines in pre- and post-production inventories. The reduction in work backlogs has also accelerated, resulting in a continued decrease in workforce numbers for the twelfth consecutive month. While weak Ethyl Acetate demand has pressured input costs and factory gate charges downward, the rate of decline has eased slightly.

Efforts to improve reliability have included faster sailing and increased capacity, but war risk insurance premiums have surged. Despite the rising Ethyl Acetate feedstock Methanol prices and weak downstream demand from the construction sector, a rise in Ethyl Acetate prices is anticipated.

Ethyl Acetate Domestic plants are running at optimum capacity to meet demand, maintaining adequate market supply and putting traders at a disadvantage. The ongoing Red Sea crisis has disrupted global supply chains, particularly affecting Asia, leading to higher import values and stabilizing domestic inventory prices at elevated Ethyl Acetate levels. Despite robust domestic production, particularly for the construction sector. However, increased risks from Houthi activity may lead to a price rise. Ocean freight rates from Asia to Europe are surpassing contract rates due to tightened vessel capacity. Challenges in managing longer transits via southern Africa are limiting additional space, and the situation in the Red Sea has led to rerouting around the Cape of Good Hope, increasing journey time and delivery costs.

Demand in the construction sector Ethyl Acetate downstream remains weak as several companies face bankruptcy. inflation has further decreased demand, prompting the European Central Bank (ECB) to raise interest rates. In June, 46.3% of companies in Germany's commercial building construction sector reported a lack of orders, up from 45.2% the previous month. This sector mainly involves constructing new non-residential buildings for private commercial use. However, the ECB's recent decision to cut interest rates by 25 basis points to 3.75% is expected to boost market sentiment as mortgage rates are anticipated to decrease.

In Germany, the sharp rise in housing stock is partly attributed to low construction activity for vacation homes along the coast, which may overestimate the number of dwellings available for primary residences. Construction costs are expected to rise at a subdued rate, leading to rise downstream inquiries.