Global 2-Ethylhexanoic Acid (2-EHA) market prevailed optimistic trend during the first week of July. The prices surged by a significant margin owing to elevated feedstock prices, shortage of material and firm demand from the downstream paints and coatings sector. The elevated price of essential raw material Propylene and Crude Oil prompted towards increased production rates thus exerting upward pressure on 2-EHA prices.

The Chinese 2-EHA market experienced a notable surge of USD 10/MT in prices, following a period of stagnation in the preceding week. Throughout the week in review there has been robust demand from the downstream paints and coatings industry. This sector, crucial to the consumption of 2-EHA, has benefited from the strong performance of China's domestic automotive and construction sector. Statistics suggest that 426,039 EVs were sold in the April-June. BYD, a Chinese competitor, sustained consistent growth in electric vehicle (EV) sales, whereas newcomers like Nio achieved exceptional performance in the last quarter. Nio's vehicle deliveries surged impressively, more than doubling to 57,300 units in the second quarter. Price cuts and a growing shift in consumer demand from gasoline-powered vehicles to EVs and hybrids are the main reasons behind the strong sales of Chinese EV makers in recent months. The significant increase in EV sales, supported by competitive pricing and consumer preferences, has reinforced the demand for 2-EHA used in automotive paints and coatings.

Simultaneously, the North American 2-EHA market experienced a notable price increase during the first week of July 2024. This price surge was primarily attributed to the increased cost of imports from international markets, particularly from Asian countries, due to elevated freight charges. This shortage is closely linked to ongoing port congestion in some of Asia’s busiest trade hubs, a situation that may persist into August. Ships diverting away from the most congested maritime gateways are causing bottlenecks at alternative ports. Notably, Asian ports such as Port Klang, Shanghai, Qingdao, Guangzhou, and Shenzhen are experiencing significant delays. Ships are facing waiting times of up to four days to berth at Shanghai, two days at Qingdao, and up to three days at Port Klang. This ship bunching effect, a consequence of earlier port congestions, is severely disrupting the supply chain and contributing to the shortage of 2-EHA in North America.

Despite this, the demand for 2-EHA has remained muted in North America throughout June 2024, with the trend expected to persist into July. The weaker-than-expected performance from the prominent end-user automotive sector driving down the demand for 2-EHA, a crucial ingredient used in automotive paints and coatings.