Acetic acid price surges on supply reduction

China acetic acid price surged in the week ending Sep 18, on reduction of supply. As of Sep 18, East China acetic acid price soared to 7,500-7,800yuan/mt ex-works, up 27.5% from a week earlier.

The sharp rise in acetic acid price was caused by plants’cutting production due to dual controls on energy consumption and intensity. Meanwhile, delivery from Shaanxi Province was suspended from Sep 13 to Sep 18 due to the National Athletic Meet. In addition, Tianjin Bohai Chemical postponed the restart of its acetic acid plant, Sinopec Great Wall’s plant was still under maintenance, and some plants were running unstably, leading to production losses. As a result, suppliers raised prices on supply shortage.

Due to the dual controls on energy consumption and intensity in Jiangsu Province, Jiangsu Sopo had shut its 400kt/yr acetic acid plant, and Yangtze INEOS (Nanjing BP) and Nanjing Celanese also planned to cut production later, bolstering market sentiment.

Downstream plants were also affected by the dual controls, as several major acetic ester plants are located in Shandong and Jiangsu Provinces. Taixing Jinjiang, Jiangyin Baichuan and Shandong Yankuanghad to shut their plants. As a result, ethyl acetate plant operating rate dropped to 26% as of the week ending Sep 18, leading to production loss of 12.12kt and reduction in demand for acetic acid of 8.326kt. Butyl acetate plant operating rate fell to 19%, leading to production loss of 4.355kt and reduction of demand for acetic acid of 2.308kt. However, the contraction on supply side outpaced that of demand.

Product inventory in acetic acid plants slid notably, as feedstock inventory was low in downstream plants and buyers entered to buy in the anticipation of price rise. Meanwhile, some downstream plants purchased to restock prior to the mid-Autumn Festival and National Day holiday.

It is currently expected that the dual controls in Jiangsu and Shandong could last till end of Sep, and plant maintenance would continue in North and Northwest China, hence the supply could not relieve in Sep. Downstream demand could continue to support acetic acid market with restocking prior to the National Day holiday in the beginning of Oct.