Mineral Turpentine Oil (MTO) prices have stabilized in the global market despite prices of feedstock crude inclining globally by 8%. This is largely due to a modest recovery of the construction industry in the month of August. Adequate demand and supply gap is found to have existed in the global market.

In the second quarter, prices, however, had depreciated due to the weak performance of the construction industry due to unexpected rains in the monsoon season in Asia and inflationary pressure in Europe and the USA which led to a standstill in the construction industry and consequently subdued the demand for MTO. As global financial conditions started to improve, demand from the downstream paint and coating industry also gained momentum, leading to the consumption of existing inventory of MTO. At the same time, the industrial solvent market continued to bolster in the middle of the 3rd quarter of 2023, as inflation rates cooled in August 2023 after continuous efforts of central financial institutions of different countries.

In the meantime, demand for MTO maintained overall stability in the US market despite a modest recovery in the construction sector. As per the market sources, prolonged labor shortages in the country have affected the actual growth of the construction sector. However, it was observed that construction activities improved on a month-on-month basis during August 2023 but still hovered below the pre-pandemic level. Further, producers were also trying to pass the price burden of rising global crude oil value to MTO consumers in order to sustain their margins. Further, some players were also optimistic about the coming seasonal holidays in winter, which will eventually increase the stocking activities for MTO and support the price uptrend.

On the other hand, in Asia, China’s economic activities remained low, and the construction sector was struggling to gain momentum, which led to mild fluctuation in the prices of MTO. Several financial institutions and industrial experts have anticipated that the Chinese market (especially the construction sector) is likely to remain subdued for the rest of the year and will only revive after the hit of the festive season in the country. At the same time, in India, MTO prices remained unchanged during August, as construction activities have started to recover post-monsoon season. Traders based in the country believe that MTO prices will rise in the coming month ahead of the arrival of the festive season in the country amidst rising crude oil value.

Overall, the key players in the industry have mostly presented with a positive outlook for MTO in the global construction industry, despite stating that the current state is still an early stage of recovery after the economic slowdown, but once this growth recovery gets further entrenched, a comparatively more confident outlook will be presented in terms of consumption.