Low Demand Impacts US Maleic Anhydride Prices in mid-November 2023

In the third week of November, Maleic Anhydride prices in the US market remained stable, influenced by a weak demand outlook from downstream sectors such as butanediol, synthetic resin raw material, paints, and coatings. The domestic and international markets both reflected this subdued demand. The continuous decline in WTI crude oil in the domestic market further impacted the overall price dynamics. The production cost and operating rate for Maleic Anhydride in the US were slow, with the observed price at USD 1155 per MT, FOB USGC on November 17th.

In the energy sector, the US natural gas storage levels reached full capacity as winter approached, while Asia was actively filling storage. This situation reduced the likelihood of a Liquefied Natural Gas (LNG) price crisis in the event of colder weather in the northern hemisphere. US gas storage was reported at 99.5% full, holding around 116 billion cubic meters. US consumer prices remained unchanged in October, mainly due to lower gasoline prices. Underlying inflation showed signs of deceleration, suggesting a possible conclusion to interest rate hikes by the Federal Reserve. This macro-element factor contributed to the demand and production of Maleic Anhydride, as benzene (feedstock) and naphtha (upstream) are essential elements for Maleic Anhydride production.

Housing permits and starts in the US experienced an uptick in October, driven by increased single-family construction compared to the previous month, and despite positive housing trends, inflation, particularly in shelter costs, remained a persistent concern suppressing the Maleic Anhydride buyers from placing higher orders. Expectations were that housing prices would eventually decelerate, contributing to a decline in treasury yields. During this period, a weakening dollar and positive responses from equities indicated a favorable reception to disinflationary signals. The Maleic Anhydride manufacturing units and the retailer found certain relaxation for Maleic Anhydride production.

A recently introduced bill in the House of Representatives aims to increase government funding for inspection services at US ports. This comes at a time when Customs and Border Protection (CBP) is urging ports to bear the rising capital costs. As the final effect, Maleic Anhydride manufacturers and retailers may get better opportunities for trading domestically and overseas.

In response to a softer jobs report and easing inflation, the Federal Reserve appeared to be in a holding pattern. The likelihood of another rate hike diminished, reflecting a cautious stance from the Fed based on evolving economic indicators and inflation trends. ChemAnalyst anticipates that Maleic Anhydride pricing will align with bearish market trends due to subdued demand, exerting a significant influence on the overall market dynamics of the product.