Acetic acid market stabilizes after steep drop

China acetic acid market hiked significantly and then plateaued in mid-Jun. Afterwards, however, with the startup of Guangxi Huayi’s fresh 500kt/yr acetic acid plant in late Jun, the price saw whopping drops. As of Jul 15, acetic acid price in East China, the most active market, have pulled back drastically to 5,750-5,800yuan/mt, down 28% from the high point in mid-Jun.

In the week ending Jul 16, the decline in acetic acid price slowed down with the market stabilizing on the back of announcement of plant maintenance plans.

On supply front, earlier this week, Jiangsu Sopo cut the operating rate of its acetic acid plant due to technical issue on its gasifier. Hualu Hengsheng plans to shut its plant for maintenance from end-Jul to early Aug. Shaanxi Yangchang’s plant is slated to undergo maintenance next week for 7-10 days, and Tianjin Bohai Chemical Yongli also plans to shut its plant in Aug for scheduled maintenance. Meanwhile, Henan Longyu targets to restart its acetic acid plant this week, therefore, supply reduction in the market would be limited in the short term.

Guangxi Huayi’s new plant has yet to get on-spec product, while discussions for export orders picked up after the sharply drops in acetic acid price. Product inventory in the plants were consumed, supportive to the market.

The margin of acetic acid has been squeezed to around 3,100yuan/mt after the price drop, but still remains high with potential downward space. The market is expected to keep stable in the short term, but may slip again after plants completing maintenance and Guangxi Huayi getting on-spec products.