Prices of Diacetone Alcohol (DAA) have stabilized across the US market and continued their stable trend during the first half of March 2024, despite prices of feedstock Acetone depreciating by approximately 10% during this time frame.

The reason considered for the stabilization in the prices of the product is largely attributed to balanced supply situation despite high demand of DAA from the downstream paints and coating industry as the construction sector across the US continued to expand. Moreover, a healthy support to US DAA market was also provided by the importing markets of Canada and Mexico where the construction sector continued to perform well.

In terms of demand for DAA, the number of completed houses was approximately 14% higher in February 2024 than February 2023, with further anticipations of increments expected in March 2024. Real estate developers were also active during this month as the listing of the number of newly constructed houses increased by 11.3% in February 2024 with further anticipations expected in March 2024. At the same time, median prices of houses increased by only 0.3% on an annual basis. Residential construction spending increased by 7%, as single-family homebuilding rose by 10%, while new multifamily construction grew by 12%, and renovations to owner-occupied housing edged up 2%. Nonresidential construction spending rose by more than 20 %, almost evenly divided between private projects, which were recorded to have appreciated by 19 %, and public investments which were recorded to have appreciated by 22%.  This clearly indicated the expansion of the US construction sector in civil engineering, housebuilding, and commercial construction, thereby keeping the DAA market afloat. Moreover, supplier delivery times were recorded to have eased following the disruptions encountered in January 2024, on the back of worsening weather conditions.

A healthy support to US DAA market was also provided as from the importing Mexican market where nearshoring activities were recorded to have increased and the completion of several major national projects.

Across Canada, housebuilding increased by more than 12%, reaching to 19190 units which further bolstered the demand of demand from the downstream paints and coating sector.  This consequently led to a higher demand for DAA.

With demand side of DAA being healthy, decreasing production costs were largely counterbalanced in the US which consequently led to the stabilization in the prices.

Overall prices of DAA are expected to increase as demand from the US residential sector continues to strength due to the advancing home buying season of the spring months.