Weak Demand and Low Feedstock Cost Drag Down European Monochloroacetic Acid Prices

Hamburg (Germany): Following a 2-month-long uptrend, Monochloroacetic Acid prices ended March on a soft note in the European market, with buyers staying on the sidelines amid average derivative orders. Furthermore, limited cost support coupled with ample supply further deteriorated Monochloroacetic Acid prices across the regional market. Looking ahead, market players expect prices of Monochloroacetic Acid to increase as demand from the downstream industry is likely to improve to some extent in Q2 of 2024.

Prices of Monochloroacetic Acid decreased by USD 11/MT on a monthly basis in the German market. The feedstock prices for acetic acid and acetic anhydride remained on the lower end throughout the month, easing the overall production cost of Monochloroacetic Acid in the domestic market. This led to bearish market sentiments among manufacturers. However, crude oil prices increased during the given time frame due to tighter supply resulting from escalating conflicts in the Middle East and a shrinking US rig count. The soaring crude oil prices had little to no impact on sentiment as demand woes took centre stage.

Additionally, manufacturing firms operated at low rates against the backdrop of challenging economic conditions across the domestic market. Despite this, material availability was sufficient as market players had already replenished inventories in the domestic market. On the macroeconomic front, the German Manufacturing Purchasing Managers' Index (PMI) fell further below the threshold of 50, reflecting deterioration in output and new orders. Labor disputes and growth concerns loomed large in Germany's industrial landscape, casting a shadow over the nation's economic outlook. Amidst strikes and economic uncertainty, broader apprehensions arose about the implications for Germany's economy.

Furthermore, demand for Monochloroacetic Acid from the downstream agrochemical industry was sluggish due to critical economic conditions in the domestic market, dampening end-user demand. Meanwhile, purchasing activity from the overseas market diminished further as the purchasing enthusiasm of downstream buyers was average, weakening demand for Monochloroacetic Acid. According to market sources, exports to EU countries declined by 3.9% in February, indicating tepid demand for Monochloroacetic Acid from both domestic and international markets. Consequently, prices of Monochloroacetic Acid FOB Hamburg were offered at USD 1077/MT during March 2024.

According to ChemAnalyst projections, prices of Monochloroacetic Acid are likely to rise further in the European market as feedstock prices might increase and bullish factors in the oil market persist. Additionally, demand from the downstream agrochemical and other derivative industries is anticipated to gain momentum in April 2024 ahead of seasonal demand, which might further strengthen market sentiments for Monochloroacetic Acid.