Poor Downstream Performance Keeps Isophthalic Acid Prices to Sustain Downtrend in November 2024

Isophthalic Acid traders experienced a significant price decline in both China and the U.S. during the first half of November, reflecting the weak conditions in the petrochemical market.

In China, Isophthalic Acid prices tumbled down as a result of supply pressures and sluggish demand from downstream sectors. A similar trend was observed in the U.S., where Isophthalic Acid prices mirrored the downward movement of the Chinese Isophthalic Acid market. These price drops can be attributed to a culmination of several factors, including an oversupply of m-Xylene, a key feedstock in Isophthalic Acid production, and weak demand from the downstream Polyethylene Terephthalate (PET) sector.

The drop in Meta Xylene prices, driven by oversupply in major importing countries like India, has put downward pressure on Isophthalic Acid manufacturing costs.  Additionally, limited demand from key Asian markets and a subdued performance in downstream PET industry have further weakened market sentiment, pushing Isophthalic Acid prices lower.

On the demand side, the Chinese PET market has been under considerable pressure. Prices for PET fell sharply in early November due to weak demand and reduced feedstock costs, with PTA prices down 2.4% and MEG prices also experiencing a 2.4% decline. This led to restricted purchases from downstream suppliers and a cautious approach from market participants, leaving the market price-sensitive and slow-moving.

Similarly, in the U.S., weak demand for PET, particularly from the food packaging sector, has been linked to inflationary pressures and reduced consumer spending. This slowdown has led manufacturers to adopt cautious purchasing strategies, resulting in rising inventory levels and a lack of new orders for PET, directly impacting the Isophthalic Acid market.

Despite ample supply and high inventory levels, logistical challenges have further compounded the weak market conditions. Disruptions caused by Super Typhoon Kong-Rey, port delays in Vietnam, South Korea, and Japan, and rising freight rates have caused shipping delays, adding pressure on the Isophthalic Acid market.

Looking ahead, Isophthalic Acid prices are expected to remain under pressure in the short term, with weak demand continuing in both the Chinese and U.S. markets. This, coupled with an ongoing oversupply of feedstocks, are likely to keep exerting downward pressure on Isophthalic Acid prices. As the downstream PET markets struggles with reduced purchasing activity and weak terminal performance, the outlook for Isophthalic Acid prices remains bearish. Economic uncertainties, limited market activity, and low purchasing willingness are likely to continue exerting downward pressure on the prices in the coming weeks.