Cumene Prices In the US Market Pick Pace Amidst Increasing Demand Pull

Texas (USA): Cumene prices in the US market continued to gain strength as the prices increased approximately by 1.4% owing to the increased production cost and the looped demand outlook for the commodity from the end-use manufacturing units. The demand for cumene from acetone, Bisphenol A, pharmaceutical, paints, and coating sectors have showcased fluctuating market dynamics compelling the cumene manufacturers to keep the prices on the higher edge. On the week ending January 12th, the acetone market prices were observed at USD 1480 per MT, FOB Louisiana showcasing the better number of inquiries about Cumene in the US market.

The repercussions of the Red Sea diversions have now extended into the energy markets. Despite ongoing military interventions by the U.S. and its allies against Houthi rebels, shipping experts anticipate that the crisis may persist for several months, potentially resulting in a shortage of cargo containers. The frequency of Houthi attacks appears to be escalating, prompting several product tanker operators to steer clear of the affected area. The decision to take longer transit routes around the Cape of Good Hope could contribute to a shortage of available cumene tonnage if the situation persists. This, in turn, may drive up rates and stocks in the cumene manufacturing and consuming industry.

The global naphtha (major upstream element) markets are anticipated to face diminished profit margins in 2024, as the expansion of refining and petrochemical capacities in China and the Middle East surpasses the global growth in demand. Traders and market participants suggest that this imbalance may lead cracker operators to maintain low run rates. Additionally, there might be an increase in the use of naphtha in the global gasoline blending pool, particularly during the U.S. summer driving season, potentially capping retail fuel prices. Naphtha serves as a crucial component in the production of various petrochemicals, including paints, plastics, and fibers, as well as serving as a blendstock for gasoline. As a ripple effect, the production of the cumene may face a narrowed demand-supply gap leading to increased cumene prices.

Due to interest rates reaching their highest levels in decades, individuals who have recently purchased homes are becoming hesitant to relocate, fearing the potential loss of their exceptionally low mortgage rates. When mortgage rates experience a significant increase, this phenomenon known as the "lock-in effect" can have repercussions on the housing inventory available for sale. As per ChemAnalyst, cumene prices in the US market are expected to increase further in the upcoming weeks as propylene may continue to increase in the domestic and international markets amidst the better productivity rate and moderate demand outlook.