Decreasing Salicylic Acid Prices and Market Challenges in the European Market in August

The cost of Salicylic Acid has decreased throughout the second quarter of 2023 in the European market. Salicylic Acid market fundamentals among manufacturers were noted to be severely constrained by the catastrophic demands from the downstream industry. Tight monetary policies and erratic energy costs have largely influenced the repeated price realizations of Salicylic Acid. The output rates of manufacturing companies have been reduced amid a difficult macroeconomic climate because the demand from the downstream pharmaceutical industries has not improved.

The performance of important manufacturing sectors has been negatively influenced by the still-high inflationary pressures in Germany, the continent's largest economy, despite the European Central Bank's ongoing efforts. Despite the finished items' price decrease and mounting inventory pressure, downstream market participants were unwilling to buy them. In addition, the European Central Bank's actions to tackle the ongoing high inflation have resulted in eight straight increases in interest rates in June.

Meanwhile, an unstable and consolidated market environment is anticipated to affect the raw material (Phenol) prices for Salicylic Acid. Late in June, the INEOS Group subsidiary INEOS Phenol said it would rearrange production at its 6,80,000 mt/yr facility in Doel, Belgium, close to Antwerp. The business cited difficult market conditions and the requirement to grow the Business. Germany's crude supply remained strong on the input energy front despite a slowdown in purchases from the manufacturing sector. The total amount of gas inventories in the European Union and the UK was 889TWh, according to Gas Infrastructure Europe. While the average fill over the previous ten years was only 60%, the storage facilities had already reached 79% of their capacity. These all have the potential to have an impact on the Salicylic Acid market.

Also, the Organization of the Petroleum Exporting Countries (OPEC) and its allies have been increasing their production of oil in recent months. This has also contributed to the decline in the prices of Salicylic Acid. The European merchants and suppliers, on the back of sluggish demand outlook and low offtakes from the end user sector, are propelled to reduce the price of Salicylic Acid in order to destock the existing inventories among them.

According to the pricing intelligence of ChemAnalyst, it is projected that the weak terminal demand from the downstream sectors will change the downward pricing dynamics of Salicylic Acid. Furthermore, the price competition in the Asian market is anticipated to intensify consumer concerns and have an impact on Salicylic Acid pricing in the European market.