Crash in Acetic acid market in China with supply exceeding the demand

In this week, the local producers of China decreased Acetic acid prices to $1092/ton Ex-works Qingdao compared with the price of $1133/ton with week-on-week declination of 3.75%. Compared to the previous month, it increased by 2.35%. The fall in prices was closely tied to fall in upstream Methanol futures in November. As per Zhengzhou Commodity Exchange (ZCE), the January contract for Methanol futures on 29^th Nov., closed at $419/ton, down $3/ton or 0.89% day-on-day.

Downstream demand was seen weak, and consumers started purchasing on need-to basis. Main factories were operating stably while the supply was relatively sufficient. As per market players, new orders were limited, and inventory levels were higher in November. The prices of Coal in China were slipped and sale situation in coal areas had improved. The coal inventories increased and willingness to purchase is low. The quotation for traders is high and actual transactions are less. Due to ample demand and crashed price of upstream products the downfall can be seen.

Acetic acid is an aliphatic organic acid. It is a hygroscopic, corrosive liquid with a vinegar-like odor. It can be synthesized by oxidizing acetaldehyde in the presence of manganese or cobalt salts. It is utilized for synthesizing acetic anhydride, cellulose acetate and acetic esters. US is the major exporter of Acetic acid contributing to 24% of world trade. Germany and Belgium are the major importer with sharing 14% consumption in insulation and paint industry.

According to Chemanalyst, the prices will decline as current domestic acetic acid manufacturer will running stably. The supply will exceed the demand and the market supply will be sufficient. In the short term, the acetic acid market of China will be weak, and the downstream procurement will still be rational. Also, the price of thermal coal will remain weak in later stage.