Acetic acid price continues hiking amid tight supply

China acetic acid price has been hiking since Aug, up from 3,000yuan/mt in the beginning of the month to 3,900yuan/mt as of Aug 24. The profit has widened to 1,360yuan/mt in Aug, back to above 1,000yuan/mt after one year. The driving force comes from unexpected issues of acetic acid plants, reduction of supply, as well as inventory at record low.

Product inventory at acetic acid plants hovered high at around 150kt in the first half of 2023. Since Jun, some plants in East China were shut intensively, with average operating rate down to 60%, leading to continuous reduction of product inventory. In Jul, the restart progress of acetic acid plants was slower than expected. Inventory maintained low with limited commercial supply available. In Aug, under the high temperature and rainy season, several plants were shut unexpectedly, with average operating rate down to around 70%. Product inventory further decreased to hit this year's new low of 80kt.

Currently, Jiangsu Sopo has restarted its plant after the trip last weekend, while Guangxi Huayi's plant is under shutdown, Yangtze INEOS' plant is still shut, and Anhui Huayi plans to shut its acetic acid plant on Aug 25 for scheduled maintenance. The average plant operating rate may drift lower.

However, the operating rate of main downstream plants kept relatively high. PTA plant operating rate is around 82%, with good demand for acetic acid. Operating rate of vinyl acetate plants has increased heavily in Aug, and as the plants are mostly located in Northwest regions, local acetic acid price hikes obviously.

In a conclusion, acetic acid price may keep high in the short term. However, after the rapid rise, downstream plants turn reluctant to buy and purchasing activity reduces. Therefore, acetic acid price may correct regionally. In Sep, the tight supply is unlikely to alleviate in the short term, and low inventory may continue throughout the month. Market outlook is optimistic amid rosy expectation for investment and consumption in Sep and Oct.