For the Quarter Ending December 2024
North America
The North American Mineral Turpentine Oil (MTO) market experienced mixed conditions during Q4 2024 due to rising feedstock Crude Oil prices and various supply disruptions. Crude Oil prices increased by approximately 2%, but later depreciated by around 1%, which continued to influence MTO production costs. The first month of the quarter was impacted by unfavorable import conditions, including a strike between USMX and ILA that caused delays in unloading ships and increased lead times, further driving up prices. Throughout most of the quarter, US suppliers primarily relied on existing inventories, with the hurricane season extending until November 2024.
By the end of the quarter, the market turned bearish, dominated by liquidation activities as suppliers sought to clear stock. Demand remained sluggish, particularly in the construction sector, which showed minimal fluctuations and prevented any significant recovery.
As the year closed, US suppliers continued liquidating inventories to avoid inventory devaluation and mitigate year-end tax repercussions.
APAC
The APAC MTO market experienced a mixed trend in Q4 2024, with prices dropping by 8.5% before recovering by 5.3% in December. A 3% rise in crude oil prices in October had little impact on MTO prices, despite higher import volumes due to increased availability of Urals crude. However, total crude oil imports decreased by 8% month-on-month and 6% year-on-year, averaging 4.31 million barrels per day (mb/d). MTO production reached 3 million metric tons (MMT), while consumption was only 0.8 MMT, resulting in ample supply and subdued pricing.
In November, crude oil prices depreciated by 4%, further lowering MTO prices. Refinery runs increased by 250,000 barrels per day, raising production to 3 MMT, while consumption remained steady. Market expectations indicated continued increases in production, maintaining downward price pressure.
By December, MTO production costs remained stable, supported by steady crude oil prices. However, crude oil imports showed a slight 0.5% increase, with a 17% drop in Russian crude imports. As regional supplies ran low and producers hesitated to further lower prices due to ongoing declines, BPCL revised its prices upwards, contributing to a recovery in the market.
Europe
The European MTO market witnessed mixed trends, predominantly following a bearish market situation. While supplies from the APAC region remained constrained, the European market continued to experience ample availability of the product. Demand from downstream industries, especially paints and coatings, remained sluggish, with minimal off-takes observed across the region. Midway through the quarter, trading activities were subdued, further hindered by strikes and disruptions at key ports in Northwest Europe, which caused delays in circulation and impacted logistics.
As the quarter advanced, liquidation activities gained momentum, with market participants focusing on clearing excess inventories ahead of the festive holiday period. Despite the ongoing challenges, the market was largely supported by limited supply disruptions and no major outages, ensuring a stable flow of product into the region.
By the end of the quarter, the overall market sentiment remained predominantly bearish. The combination of weak demand from key downstream sectors and the continued availability of sufficient supplies kept the market in a steady but downward trend. This balance between available stock and subdued demand resulted in a cautious outlook as the year ended, with expectations of further challenges in the upcoming quarter.
For the Quarter Ending September 2024
North America
The North American Mineral Turpentine Oil (MTO) market faced a bearish situation during the quarter, largely driven by a 13% decline in crude oil prices. Despite this price drop, MTO production in the US remained low due to reduced refinery rates. According to data from the EIA, average refinery run rates decreased from 92.7% in July to 92.2% in August, and further to 90.8% in September 2024, as the ongoing hurricane season prompted cautious operational measures across US refineries. Some facilities even declared force majeure due to damage from Hurricanes Beryl and Francine, further contributing to the low production levels of MTO.
Demand conditions from the downstream paints and coatings industries were unfavourable, impacted by seasonal factors and high mortgage rates that dampened homebuying prospects. As the quarter progressed, uncertainty loomed over the market due to upcoming elections, leading to suppliers receiving only small quantities of orders.
This combination of low production, weak demand, and market uncertainty created a challenging environment for the Mineral Turpentine Oil market in North America.
APAC
The Asian Mineral Turpentine Oil (MTO) market experienced notable fluctuations during the third quarter of 2024. Overall, MTO prices remained stable, exhibiting a variation of approximately 0.8%. In the opening month of the quarter, reduced production amidst higher consumption drove a bullish market, with active restocking ahead of the festive season contributing to rising prices. However, the market soon shifted to a bearish trend as production costs decreased, largely due to a 13.5% decline in crude oil prices, which lowered MTO production costs. Additionally, several refineries that underwent maintenance in the earlier part of the quarter returned to production, improving domestic supply levels. This bearish market situation was further exacerbated by the underwhelming performance of the downstream construction industry, particularly during the monsoon season, which dampened demand prospects. Even after the monsoon season, recovery was reported as sluggish, continuing to exert downward pressure on the MTO market. As a result, the combination of increased supply and weakened demand contributed to a more challenging market environment for Mineral Turpentine Oil across the region.
Europe
The European Mineral Turpentine Oil (MTO) market experienced a bearish trend throughout the quarter, primarily driven by unfavourable demand conditions from the downstream construction sector and a 13% depreciation in crude oil prices, which eased production costs. Despite this, MTO supplies across Europe remained moderate due to several refineries undergoing maintenance turnarounds, limiting production capacity. Major firms conducted strategic reviews of their assets, leading to refinery closures and a subsequent reduction in domestic supplies. Additionally, strikes in Germany and various other regions threatened export conditions, compounded by the worsening crisis in the Red Sea, which resulted in inventory accumulation at ports and further pressured prices downward. The ongoing downturn in the construction sector persisted, with investment sentiments remaining historically low, leading to a lack of incoming work for European contractors. Consequently, many suppliers opted to destock construction materials in response to deteriorating demand conditions. Overall, these factors created a challenging environment for the MTO market in Europe, characterized by reduced production, weakened demand, and declining prices.
For the Quarter Ending June 2024
North America
The second quarter of 2024 has stabilized in the Mineral Turpentine Oil (MTO) market in North America, marked by a mixed trend in prices during this quarter. The decline in MTO prices in May 2024 has been influenced by several significant factors, primarily the reduction in crude oil costs and oversupply conditions. The depreciation in the prices of upstream has notably eased production costs, contributing to lower MTO prices. Furthermore, an oversupplied market condition, driven by excess inventories and high stockpiles of MTO, exacerbated the price decline.
Turning to June 2024, the end of the second quarter witnessed prices of MTO increase by approximately 2.6% due to heightened production costs and cautious operations across the US Gulf Coast and Louisiana despite demand conditions being largely unfavorable from the downstream construction market. The increment in the prices is further attributed to lengthened delivery times and higher transportation costs which further pushed the prices of MTO on the higher end. Higher mortgage rates are expected to further cast a negative sentiment for the transactions in the downstream construction industry keeping overall demand conditions moderate. The procurement activities from the industrial application remained positive for the time being.
The correlation between reduced upstream prices and slow downstream demand was evidence of stability in the MTO prices. Disruptions such as issues with maritime transportation and highway insecurity further complicated the supply chain, adding to the tightening of supplies in the US MTO market.
APAC
The second quarter of 2024 witnessed a notable depreciation in the prices of Mineral Turpentine Oil (MTO) across the APAC region. This quarter was characterized by a culmination of various factors that collectively influenced market prices. Foremost among these was the substantial reduction in feedstock Crude Oil prices, which saw a depreciation of approximately 7% globally. This reduction in production costs, however, did not translate directly into lower MTO prices due to pressures from downstream activities, particularly in construction and exports of petroleum products. Additionally, the market grappled with moderate inventory levels and a relatively softer turnaround in manufacturing activities, further squeezing profit margins. In India, the price dynamics of MTO saw the most significant price fluctuations, driven by a combination of strong demand from the downstream paints and coating industry and infrastructural development activities during May 2024. Despite the positive demand, India's MTO pricing environment was predominantly bearish due to an oversupplied market. The production disruptions due to extreme heat waves and reduced working hours exacerbated the supply situation. Overall, the price trend for MTO in India reflected a declining sentiment. The quarter concluded with the price of MTO at USD 988/KL, Ex-Mumbai, signaling a negative pricing environment. No specific plant shutdowns were reported during this quarter, but the cumulative effect of the aforementioned factors led to a challenging pricing scenario for MTO in the APAC region, particularly in India.
Europe
In the second quarter of 2024, the European Mineral Turpentine Oil (MTO) market experienced significant price decreases due to several adverse factors. This period saw declining crude oil prices, which lowered production costs for MTO. Additionally, the market faced an oversupply from the influx of inexpensive imports from neighboring regions. Despite moderate demand from the downstream construction sector, the overall pricing environment remained negative as supply consistently exceeded demand. Seasonal rainy weather further reduced construction activities, impacting MTO demand. In Germany, the MTO market was particularly strained, with a marked decline in downstream demand. The country experienced a sharp contraction in the construction sector for the second consecutive month, exacerbated by logistical challenges due to severe flooding, further hindering market circulation. Consequently, the German market saw the most substantial price changes within the region. The overall trend reflected a consistent downward trajectory, heavily influenced by both excess supply and weakened demand conditions.
For the Quarter Ending March 2024
North America
The North American MTO market experienced a largely bullish market situation during the opening quarter of 2024. The downstream construction sector across the United States witnessed a healthy performance as indicated by the number of house completions, heightened commercial construction activities and real estate developers being more active during the months of February and March 2024, except in the month of January 2024.
The initial month of this quarter witnessed a slowdown in the construction sector due to challenging weather conditions which led to limitations in logistics and transportation. The month of January usually witnessed a slowdown in the demand from the downstream paints and coating industries, stemming from subdued construction activities across North America due to the prevailing winter season.
In terms of production costs, prices of MTO across the US market continued to receive cost support from increasing prices of feedstock Crude Oil, which have appreciated by approximately 10% during the opening quarter of 2024, due to mounting geopolitical tensions across the Red Sea.
Asia
The initial quarter of 2024 has posed challenges for Mineral Turpentine Oil (MTO) in the APAC region, with prices experiencing notable fluctuations influenced by various factors. Particularly in India, the region's largest market, significant price changes have been evident, reflecting broader trends. Across Asia, the MTO market has been characterized by bearish sentiment, with prices declining by approximately 3% compared to the previous quarter. This downturn can be attributed to diminished demand from the paint and coating industry, exacerbated by a slowdown in the construction sector during the peak winter season. The post-festive season lull has further contributed to reduced demand, resulting in ample supplies and surplus inventories. Additionally, the expansion of manufacturing activities in India has exacerbated the oversupply situation. Despite improvements in weather conditions, demand from downstream industries, particularly the textile sector, has remained modest. Consequently, the pricing environment for MTO in the APAC region, particularly in India, has been negative in the first quarter of 2024, marked by low demand from the paint and coating industry and an oversupply scenario leading to price declines.
Europe
Throughout the opening quarter of 2024, prices of Mineral Turpentine Oil (MTO) in the European market displayed volatility, despite a notable increase in the prices of crude oil, rising by approximately 10% during this period. Initially, MTO prices faced a bearish market situation due to subdued performance in the construction sector. However, as the quarter progressed, the heightened prices of crude oil, driven by geopolitical tensions, eventually led to an increase in MTO prices. Despite this, demand conditions for MTO from downstream paints and coating industries remained unfavorable, reflecting the subdued construction sector. Across Europe, the construction industry continued to experience retrenchment for the fifteenth consecutive month, evident in declining permits and construction projects. Real estate firms maintained a pessimistic outlook for the year, with historically negative investment sentiments observed across all segments of the construction sector, including residential, commercial building, and civil engineering activities. The European MTO market received some support from improvements observed in the British market, where the construction sector approached stabilization, offering some demand support for downstream paints and coating industries. Additionally, secondary demand emerged from the downstream textile industry, as transactions increased due to changing weather conditions.
