For the Quarter Ending December 2024
North America
The North American Diacetone Alcohol (DAA) market experienced a notable price surge during the final quarter of 2024. This upward price movement can be attributed to a combination of factors, including a shortage of domestically produced material and strong demand from the downstream paints and coatings industry.
In the initial months of the quarter, production in the region was hampered by adverse weather conditions, including hurricanes and heavy downpours, which led to frequent power outages and disruptions. However, as the quarter progressed, the supply situation began to ease, allowing for a stabilization in production levels.
On the demand side, purchasing activity from the downstream construction sector remained relatively modest. Data from the U.S. construction market revealed a 0% change in construction spending in November 2024 compared to the previous month, following an increase in October. This subdued demand from construction, combined with supply constraints, contributed to the price surge in the DAA market, though growth was tempered by slower expansion in certain sectors.
Asia-Pacific
The Asian Diacetone Alcohol (DAA) market experienced bullish price trends during the final quarter of 2024, primarily driven by firm demand in the Chinese market. Demand for DAA remained moderately steady, with the paints and coatings sector, a key end-user industry, showing mixed performance. This limited the overall market recovery, as the sector's consumption fluctuated during the quarter. China's economic growth for 2024 stood at 5%, meeting government targets; however, this growth was uneven, as many citizens reported declining living standards. This highlighted Beijing's challenges in distributing industrial and export gains to domestic consumers. The Real estate sector data showed some stabilization, with December’s 70-city property price index revealing slower declines in home prices. New home prices dropped by 0.08%, and existing home prices fell by 0.31%, marking the fourth consecutive month of moderated declines. The surplus availability of DAA was further exacerbated by global port congestion and ongoing trade uncertainties, which disrupted supply chains and contributed to market volatility.
Europe
The European Diacetone Alcohol (DAA) market remained stable with only minor fluctuations during the final quarter of 2024. Demand from the key downstream construction sector remained subdued, particularly as Germany, one of Europe's largest construction markets, experienced a deeper downturn in October, November, and December. This downturn was reflected in a decline in both activity and new orders, driven by broader economic pressures and reduced investment in construction projects across the region. The muted demand from the construction industry contributed to the lack of upward momentum in DAA prices, which remained relatively stable throughout the quarter. Market participants reported that construction activity in December 2024 faced significant challenges. Despite slight increases in some construction activity indexes, they remained well below growth levels, marking several months of contraction. Housing activity saw its sharpest decline since September, while the commercial and civil engineering sectors showed slower but still negative growth. Germany and France continued to face difficulties, with France reporting its most significant contraction since April, leading to notable job cuts in the sector.
For the Quarter Ending September 2024
North America
In Q3 2024, the North American Diacetone Alcohol (DAA) market exhibited stable pricing, despite facing several market challenges. The primary factor contributing to this stability was the equilibrium between supply and demand. Although demand from key downstream sectors, particularly paints, coatings, and adhesives, experienced some fluctuations during the quarter, overall consumption levels remained steady, preventing any major price shifts.
On the supply side, consistent production rates from manufacturing facilities helped ensure an adequate and uninterrupted flow of DAA into the market. This stable supply situation counterbalanced the periodic dips in demand, fostering a relatively balanced market environment. Additionally, despite some upward pressures from fluctuating raw material costs and logistical challenges, such as transportation delays and rising freight charges, these factors did not significantly impact the overall pricing landscape.
As the quarter drew to a close, the price of Diacetone Alcohol remained steady at USD 2266/MT DEL Louisiana in the USA. This stability underscores the market's resilience and ability to maintain balance between supply and demand, positioning DAA pricing within a stable and predictable range throughout the third quarter of 2024.
APAC
In Q3 2024, the Diacetone Alcohol (DAA) market in the APAC region experienced a notable decline in prices, driven by a combination of economic and environmental factors. A primary contributor to this downward trend was the consistent drop in feedstock prices, which reduced production costs across the region. Additionally, sluggish production rates further compounded the pricing pressure, as manufacturers adjusted output in response to lower demand from key downstream industries like automotive and construction. China, being the most affected region, saw a significant impact on DAA prices. The construction sector, a major consumer of DAA, was notably subdued due to unfavorable weather conditions, including typhoons that disrupted building activities and hampered demand. This further contributed to a buildup of inventories, adding to the existing oversupply in the market. As a result of these factors, the price of Diacetone Alcohol in China dropped throughout the quarter, ending at USD 1500/MT FOB-Shanghai. This decline reflects the overall weak market sentiment, characterized by a supply-demand imbalance and broader macroeconomic challenges affecting the APAC region during Q3 2024.
Europe
In Q3 2024, European Diacetone Alcohol (DAA) prices experienced a decline, primarily driven by subdued demand and ample inventories. Both domestically produced and imported DAA were readily available, creating an oversupply in the market, which exerted significant downward pressure on prices. Key downstream industries, such as paints, coatings, and construction, exhibited lower-than-expected consumption levels, further compounding the market imbalance. As the quarter drew to a close, broader economic indicators reflected a mixed picture. The European Commission’s Economic Sentiment Indicator (ESI) remained relatively stable at 96.7 points in the EU, while dipping slightly by 0.3 points in the eurozone, reaching 96.2 points. Despite the overall decline in DAA prices, the steadiness of the ESI suggests improved confidence within the construction sector and among consumers, hinting at a potential recovery in demand moving forward. However, this optimism was not yet strong enough to offset the impact of weak industrial demand on DAA prices during Q3. By the end of the quarter, the downward pricing trend remained a key feature of the European DAA market, with the supply-demand disparity continuing to define the market landscape.
For the Quarter Ending June 2024
North America
The second quarter of 2024 has been marked by a significant upward trend in DAA prices in the North American market. Key factors driving this price surge include heightened production costs stemming from increased feedstock prices, notably Acetone. The market also faced supply constraints, influenced by moderate to low manufacturing rates and intermittent labour shortages, which exacerbated the disparity between demand and supply. Additionally, robust performance in essential downstream sectors, particularly paints and coatings, has sustained the demand pressure on DAA prices.
In the construction sector, demand for DAA was buoyed by robust performance as the Spring buying season commenced. With the onset of spring, construction projects across the country experienced a significant increase in activity. These projects, including rural highway repaving, freeway-style interchange construction, and safety enhancements, aimed to address infrastructure needs and accommodate growing transportation demands. This construction surge reflected efforts to meet increasing demands, maintain existing infrastructure, and expand transportation networks to support various modes of transportation.
Additionally, there was a positive signal in the hospitality sector, with the volume of hotel rooms under construction growing year-over-year for the first time since June 2023, indicating a gradual recovery. These combined factors have driven up the demand for DAA, a crucial ingredient for construction paints and coatings. The quarter concluded with DAA prices pegged at USD 2206/MT for Diacetone Alcohol DEL Louisiana, USA.
APAC
The second quarter of 2024 for the Diacetone Alcohol (DAA) market in the APAC region has largely been characterized by price stability. This equilibrium was driven by a balance between supply and demand dynamics, with adequate inventories meeting moderate to low consumer interest. Contributing factors to this steadiness included unchanged feedstock Acetone prices, consistent production rates, and a muted performance from downstream sectors such as paints, coatings, and construction. Seasonality played a minimal role, as the expected uptick in construction activity during the peak summer months did not materialize substantially, primarily due to economic uncertainties and market speculations. In China, the market experienced the greatest price fluctuations within the region. The overall trend for DAA prices in China was one of stability, underpinned by a steady supply from resumed operations at key Acetone production facilities. The quarter-ending price for DAA in China stood at USD 1517/MT FOB-Shanghai. Despite the overall negative percentage changes, the pricing environment throughout the quarter remained predominantly stable, suggesting that market adjustments were both predictable and manageable.
Europe
In the second quarter of 2024, the Diacetone Alcohol (DAA) market in Europe faced a challenging environment, characterized by a consistent downward trend in prices. Several key factors contributed to this decline, notably the subdued demand from major end-user sectors such as construction and automotive. The construction industry experienced a downturn, largely due to a combination of economic and geopolitical uncertainties. High financing costs and unfavorable weather conditions further exacerbated the situation, leading to a reduction in demand for DAA, an essential component in construction-related paints and coatings. As a result, the decreased activity in the construction sector significantly impacted the consumption of DAA. Similarly, the automotive sector witnessed a decline, particularly in the sales of electric vehicles (EVs) and passenger cars. This slump was partly due to the withdrawal of government incentives for battery-powered electric vehicles, which resulted in a noticeable decrease in new registrations. The reduction in demand for DAA, crucial for the production of automotive coatings and other related products, added to the challenges faced by the DAA market. Overall, these factors collectively contributed to the persistent downward pressure on DAA prices in Europe during the second quarter of 2024. The market continues to navigate these challenges amid a complex and evolving economic landscape.
For the Quarter Ending March 2024
North America
During the opening quarter of 2024, the North American DAA market saw significant bullish trends. Prices of DAA rose by around 3% across the region during this period. The primary reason for this modest increase was the lack of cost support from the Acetone feedstock, which experienced a decrease of over 10%, thereby lowering production costs.
This occurred alongside a robust performance in the construction sector, with notable indicators such as increased house completions, heightened commercial construction activities, and heightened involvement from real estate developers, particularly in February and March 2024, although January saw a slowdown due to adverse weather conditions impacting logistics and transportation. While January typically witnesses reduced demand from downstream paints and coating industries due to subdued construction activities in North America during the winter season, this period saw Acetone prices rising by approximately 5%, providing support to the North American DAA market.
However, in February and March 2024, the market received demand-side support as weather conditions gradually improved, bolstering the construction sector. Additionally, stability in mortgage rates during these months positively influenced transaction activities in the construction sector, particularly with the onset of the spring homebuying season.
Asia
Throughout the first quarter of 2024, Diacetone Alcohol (DAA) prices in the APAC region have consistently declined. Various factors have contributed to this trend. Generally, there has been subdued demand from the downstream paints and coatings industry, particularly within the construction sector. The sluggish recovery of construction, evident in declining house prices and limited restocking activity, has further dampened the demand for DAA. Moreover, the lackluster performance of importing markets like South Korea and Japan has added to the overall weak international demand for DAA. China has experienced the most significant price fluctuations for DAA in the APAC region, characterized by a bearish market situation marked by ample supplies and tepid demand from the construction sector. Despite stable prices of the key feedstock Acetone, which influences DAA production costs, DAA prices have continued to decrease in China. The post-Chinese Lunar New Year lull has led to a slowdown in renovation activities and a lack of restocking momentum. The financial troubles of major real estate firms like Evergrande have also negatively impacted demand for DAA from the paints and coatings industry. Overall, DAA prices have depreciated by more than 11% during the opening quarter of 2024 when comparing prices from December 2023 to the end of March 2024.
Europe
The European DAA market witnessed a bullish market situation during the first quarter of 2024 due to receival of support from the prices of feedstock Acetone. Prices of Acetone surged by approximately 20% consequently increasing the production costs of DAA. Overall, the construction sector across the Eurozone witnessed moderate improvements across Germany, but the demand conditions were not positive. Improvements in the construction sector were witnessed across the UK, Belgium, and the Netherlands, providing some support to the prices of DAA across Europe. However, demand conditions continued to remain subdued as the construction sector continued to remain mired retrenchment throughout the first quarter. This is largely indicated by declining permits and construction projects. Overall real estate firms remained downbeat with outlook conditions being largely pessimistic for this year and investment sentiments remained historically negative with contractions witnessed in all segments of the construction sector, namely residential, commercial building, and civil engineering activities. Moreover, challenging conditions in the supply system also resulted from the strikes held by the Union Worker, leading to limitations in logistics and transportation costs.
