US AES Market Stabilises in Early July 2024 Amidst Challenging Conditions in Production

In early July 2024, the US market for Alkyl Ether Sulphates (AES) stabilized following significant price increases in previous weeks. During June 2024, AES prices surged by more than 11%, driven by higher production costs and increased demand.

Production costs for AES remained elevated across the US market, as prices of Ethylene Oxide, a key feedstock, rose by approximately 3%. This increase was largely due to curtailed operations at major Ethylene Oxide plants such as Eastman Chemical in Longview, Texas, and Dow Chemicals in Plaquemine, Louisiana, leading to reduced availability creating a perfect scenario in the increment in the prices of AES.

Despite these challenges, demand for AES in the US stayed positive, boosted by warmer-than-usual temperatures experienced in June 2024. This weather prompted heightened activity in the downstream surfactant industry. Consumer spending in the US reflected this economic activity, rising by 0.2% according to the Bureau of Economic Analysis. Meanwhile, the Personal Consumption Expenditures (PCE) price index remained unchanged in recent months, following a 0.3% increase in April. Over the past year through May, the PCE index rose by 2.6%, slightly down from April's 2.7% gain, indicating ongoing inflationary pressures.

Regarding manufacturing activities, the US manufacturing sector remained in the growing territory during June 2024. US manufacturers expanded production in response to higher new orders, but the relatively muted demand environment meant that the rate of growth eased from that seen in May, indicating some procurement activities for AES.

Looking ahead, concerns about inflation and the Federal Reserve's decision to maintain interest rates at 5.25% to 5.5% may impact consumer spending and consequently affect demand in the surfactant industry, potentially influencing AES demand. Nevertheless, current AES demand in the US remains robust, driven in part by seasonal factors. The country experienced warmer-than-average temperatures across central and western regions, the Gulf Coast, Great Lakes area, and Northeast in June 2024. Precipitation patterns, as forecasted by the Climate Prediction Centre, also favoured conditions that are conducive to continued demand for AES, particularly in regions experiencing below-average rainfall.

In summary, despite recent volatility in production costs and economic indicators, the US AES market navigated June 2024 with resilience. Elevated Ethylene Oxide prices and strong consumer demand, bolstered by favourable weather conditions, contributed to a period of growth and stability in the sector. As the market evolves, stakeholders will monitor closely for further developments affecting supply and demand dynamics.