The US market for Isophthalic Acid concluded February on a decidedly bearish note, with prices in CFR Texas experiencing a notable 4.2% decrease in the latter half. This downturn reflected a confluence of factors impacting the overall market dynamics for Isophthalic Acid. The primary driver behind this price movement was the sluggish demand emanating from the downstream PET sector, coupled with intensified competition among Isophthalic Acid producers. The current market landscape offered little opportunity for producers to implement price increases, leaving them facing a challenging near-term outlook. The prevailing low demand and persistent oversupply situation is expected to further compress margins. Also, without a substantial shift in fundamental market conditions, a significant price recovery seems unlikely in the immediate future. Producers of Isophthalic Acid are, therefore, bracing for sustained difficult market conditions.

The subdued performance of the US Isophthalic Acid market mirrored the overall weakness in the downstream PET sector. Demand for US polyethylene terephthalate (PET) remained low, despite reduced pricing. A distributor noted that demand in the US was low, while a buyer corroborated this observation, highlighting the unusually high levels of inventory available. This surplus inventory, combined with the persistent competition between virgin and recycled PET (rPET) resin, further dampens the outlook for Isophthalic Acid. The increased adoption of rPET, fueled by stronger environmental regulations and growing consumer preference, is likely to exert sustained downward pressure on virgin PET demand, thus indirectly affecting the demand for Isophthalic Acid used in its production.

Adding to the pressure on Isophthalic Acid prices are the prevailing freight rates. February saw a substantial decrease in container shipping rates from Asia to the US, a consequence of increased shipping capacity. This reduction in transportation costs, while beneficial for various industries, has contributed to a more competitive landscape for Isophthalic Acid. The decrease in container rates from Shanghai to New York (13%) and Los Angeles (11%) reflected a broader trend of reduced shipping expenses. The overall effect of lower freight costs reverberated through the supply chain, creating downward pressure on Isophthalic Acid prices by impacting raw material costs and overall competitive pricing. Consequently, the prices of Isophthalic Acid CFR Texas were closed at USD 1269/MT in the week ending 21^st February.

As per ChemAnalyst, the near-term outlook for Isophthalic Acid prices in the US remains cautious. The Isophthalic Acid market is expected to continue facing weak demand, particularly in the downstream PET sectors in making beverage bottles and packaging materials. The cautious approach of buyers, limited trading activity, and subdued momentum are likely to persist, creating a challenging environment for Isophthalic Acid producers and suppliers. Given these factors, it is anticipated that Isophthalic Acid prices will remain under pressure in the short term. The weak demand, oversupply situation, and intensified competition create a perfect storm that is likely to keep prices suppressed.