Oversupply and Economic Slowdown Drive Sharp Price Decline for Butyl Acrylate in Mexican Market

If global manufacturers produce too much Butyl Acrylate relative to demand, it may result in oversupply and drive down prices. This situation typically occurs during times of economic growth or high consumer confidence when companies invest heavily in expanding their capacity. As technology for manufacturing Butyl Acrylate evolves, customers may prefer other chemicals or substances that offer better performance characteristics or environmental benefits than Butyl Acrylate. This transition away from traditional products would reduce demand and potentially depress prices. International conflicts or trade disputes between major economies could negatively affect the entire petrochemical industry, leading to reduced demand for Butyl Acrylate and causing prices to drop. Mexico being part of the NAFTA region, could also face challenges due to shifting trade dynamics. During recessions or periods of weak economic growth, industries dependent on discretionary spending, such as construction or automotive, may experience reduced demand for Butyl Acrylate and other Specialty Chemicals used in coatings or adhesives. Lower sales volumes would pressure suppliers to cut prices or risk losing market share.

After experiencing an initial uptick in pricing due to decreasing downstream demand, the market subsequently faced a sharp decline. Despite the brief fall in demand, the market succumbed to several factors contributing to its instability. Additionally, uncertainty surrounding the fertilizer market coupled with waning demand for Sulphuric Acid in the regional market further contributed to the decline in pricing fundamentals. These combined factors resulted in a negative market pricing shift from downstream adhesives, coatings, and plastics. The prices of Butyl Acrylate plunged in the Mexican market to USD 1485/ton CFR Manzanillo as per trade data.

Due to rising inflation, the central bank decided to increase interest rates to curb price hikes. However, this measure turned out to be unfavorable for the pricing of Butyl Acrylate, setting off a chain reaction across the economy. Consequently, the subsequent slowdown in economic activity, especially within the adhesive and sealant industries, caused a considerable decrease in demand, resulting in a steep decline in prices. Meanwhile, the market value of Butyl Acrylate rose in the Mexican market owing to the growing requirement for Butyl Acrylate along with the inventories of feedstocks such as Acrylic Acid and Butanol, as reported through trade statistics. On the other hand, freight costs to China/East Asia increased by 6 percent based on the Freightos Baltic Index. Nonetheless, Butyl Acrylate exports witnessed a year-on-year upswing in Q3 2022, as indicated by available trade data in the Mexican market.