Stability in Mexico's Ethylene Vinyl Acetate Market Amid New Tariffs and Seasonal Demand

Manzanillo, (Mexico): The Ethylene Vinyl Acetate market in Mexico continues to showcase stability in July as the prices have remained within a narrow range. Market participants have observed that overall packaging demand in Mexico has remained moderate. However, there is an uptick in activity within the country's packl?aging sector, signaling improvement in the recent weeks. Despite ongoing pressure to negotiate prices for liner and medium materials, the packaging market demonstrates increased activity compared to the previous month.

Cost-wise, amid increased manufacturing costs of Ethylene Vinyl Acetate, the sellers in the exporting nations sold at higher rates. Ethylene prices in the US market experienced noted further increases following Hurricane Beryl. Logistical disruptions and plant operation issues constrained supply throughout the week, boosting spot activity. Although feedstock Ethane prices continued to decline, providing limited cost support for Ethylene, the tight supply amid plant closures led manufacturers to slightly raise their offers.

Recently, the Mexican government implemented new import tariffs ranging from 15% to 35% on 21 packaging and paper products. These tariffs, which will be in place for two years until April 2026, apply to all countries. The move aims to make domestic products more attractive under the USMCA and reduce reliance on Chinese imports, despite higher freight costs. Consequently, the demand for Ethylene Vinyl Acetate from the North American markets is expected to increase, reducing the cost burden on imports from cheaper overseas alternatives. For the week ending on 19th July 2024, the assessed prices of Ethylene Vinyl Acetate CFR Manzanillo were USD 1750/MT.

Inquiries for Ethylene Vinyl Acetate from downstream industries have remained moderate, with high inventory levels and less emphasis on restocking supplies. In the downstream footwear and solar sectors, challenges have arisen due to the influx of cheaper solar panels from China, impacting the Ethylene Vinyl Acetate market. Recently, the Mexican government requested an exemption from U.S. tariffs on bifacial solar panels following the Biden administration's decision to end their exclusion from safeguard tariffs. The tariffs could lead to factory closures and the loss of hundreds of specialized jobs and such actions would undermine regional job protection and the promotion of sustainable energy.

The ChemAnalyst database indicates that Ethylene Vinyl Acetate prices are projected to increase in the forthcoming weeks. Demand spikes for Ethylene Vinyl Acetate are presumed again as manufacturers prepare for the holiday season, with heightened production in the packaging and consumer goods sectors. Between August and October, Mexico observes several holidays and events that can influence market demand for Ethylene Vinyl Acetate, especially in sectors like packaging and consumer goods. These events and holidays can create a ripple effect, boosting demand for Ethylene Vinyl Acetate in the production of goods, packaging, and other related industries.