Tightening Supply and High Feedstock Cost Lift European Monochloroacetic Acid Prices

Hamburg (Germany): Heading into the third week of May 2024, prices of Monochloroacetic Acid have risen across the European market due to high upstream costs and low inventory levels. However, demand for Monochloroacetic Acid from the downstream derivative sector remains steady in the domestic market, with expectations that it may not recover soon amid external challenges.

According to the latest data from ChemAnalyst, prices of Monochloroacetic Acid have increased by USD 19/MT in the German market. The support from feedstock Acetic acid and Acetic anhydride has been adequate, contributing to the persistent rise in prices of Monochloroacetic Acid in the domestic market, fostering bullish sentiment among manufacturers. Additionally, recent weeks have seen a climb in crude oil prices, signalling improving demand in the US and China, further impacting the production costs of Monochloroacetic Acid.

Furthermore, operating rates have remained under pressure domestically, with material availability observed on the lower end, leading to an upward shift in price realization of Monochloroacetic Acid. Market sources indicate a 0.4% month-on-month drop in Germany's industrial output in March, with expectations of further decline in the coming months. Meanwhile, spot prices for Monochloroacetic Acid have typically remained at or above levels for contractual sales, with buyers aiming to maximize contractual offtakes amid delays caused by the Red Sea crisis.

Currently, Monochloroacetic Acid demand from the downstream agrochemical and surfactant industries in the domestic market is moderate, with steady consumption from end-users. Bayer’s Crop Science Division has outperformed its peers despite a challenging market environment, with sales in the Herbicides segment falling by 13.3% and Fungicides by 8.5%, attributed to lower volumes and pricing pressures. However, German exports saw a slight increase of 0.9% in March, according to the German Federal Statistics Office, Destatis, though exports as a whole contracted in the fourth quarter.

Prices of Monochloroacetic Acid FOB Hamburg were settled at USD 1159/MT during the week ending May 17th.

Looking ahead, ChemAnalyst expect for prices of Monochloroacetic Acid is likely to increase in the European market due to further expectation of rise in the feedstock Acetic acid and Acetic anhydride prices. In addition, material availability is expected to remain tight as operating rates might be low in the domestic market of Europe. Meanwhile, the concern regarding the production shutdown remained buoyant given the decline in profit margins and several petrochemical giants including Monochloroacetic Acid have completely shut operations in the European region. However, demand for Monochloroacetic Acid from the downstream industry is not likely to improve in the coming weeks in the backdrop of sluggishness in major end-use industries in Europe.