Decline in Succinic Acid prices globally amid drop in quotations from Exporters

The Succinic Acid price trend showed a bearish movement in the global market during March 2024. The import quotations of Succinic Acid witnessed a reduction of 4.1% in the US market. Similarly, in the European market, the product prices fell by almost 5%. The key reason for this downward movement was the abundant availability of stocks in the international market due to firm production rates in major Succinic Acid producer China, and offtakes were moderately low after the spring festival. At the same time, global freight costs decreased during the month as container traffic bypassed the Suez Canal, stabilizing operations, and lowering ocean rates on major trade routes. Towards the end of the month, ocean rates continued to decline. On the other hand, the international air cargo market experienced increased demand for the third consecutive month in March, driven by e-commerce expansion and shipping disruptions in the Red Sea, impacting air freight rates and import prices of Succinic Acid.

Meanwhile, buyers showcased mixed demand in the US market amid moderation in consumption rates from various end-user sectors. The food sector exhibited firm demand due to increased consumer orders for the Easter festival in the country, and the food index rose by 0.1% in March 2024 on an MOM basis. Meanwhile, Succinic Acid demand stabilized among personal care product manufacturers due to reduced consumption of moisturizers amidst rising temperatures in the Northern Hemisphere. Additionally, the inquiries were low from Polyester fibre makers amid a decline in offtakes from end consumers and a 0.7% rise in apparel prices during the month.

Simultaneously, production costs of Succinic Acid fell as feedstock n-butanol prices declined consistently amid reduced offtakes in the market after the spring festival. On the other hand, import costs of feedstock Benzene were firm initially due to an escalation in upstream Crude Oil prices after the announcement of Crude Oil production cuts by OPEC+ and a decline in supplies in the international markets amid geopolitical tensions. However, feedstock Benzene prices eased towards the end of the month, and a decrease of 1.1% was seen in pure Benzene prices between 21st to 31st March 2024 due to increased stockpiles of upstream US Crude Oil in the market. Furthermore, China's Producer Price Index (PPI), which measures factory-gate costs for goods, also fell by 2.8% compared to the previous year. At the same time, the Yuan depreciated 0.34% against the USD during March 2024. It negatively impacted the Succinic Acid prices from Chinese exporters, and Succinic Acid CFR Texas quotations hovered at USD 1630/MT in the USA.

As per the estimation, the Succinic Acid demand may increase from downstream industries during Q2 of 2024 as offtakes may remain firm due to the anticipated increase in consumption rates of Polyester fibre during summer. However, Succinic Acid supply availability may remain moderate to low in the market because of increasing freight charges and air freight volumes amid the Red Sea crises.