Acetic acid price heavily affected by supply growth

In the first half of 2024, China acetic acid price was in the lack of advancing momentum, domestic production hit new high, and exports exceeded expectation. In the latter half year, acetic acid supply and demand balance may turn weaker, with supply becoming ample.

In the first half of 2024, domestic acetic acid production reached 5.16 million tons, up 16.7% from the same period last year. Hualu Hensheng (Jingzhou) and Hengli Dalian started their new plants in the fourth quarter of 2023, and they contributed to the production growth in the first half of this year. In addition, Jiangsu Sopo restarted its long-idled 200kt/yr unit, and then China acetic acid total capacity reached 12.11 million mt/yr.

In the second half year, several plants, such as Hualu Hengsheng, Yanchang and Huayi could undergo maintenance in the third quarter and especially in Aug. Downstream plants may entered to buy in advance in Jul and acetic acid price could move higher. In the fourth quarter, acetic acid price could be under immense strains from rebounding operating rate and increasing production.

New plants in 2023-2024

China acetic acid exports reached 553.4kt in Jan-May 2024, up 41.6% on year. Some overseas plants were disrupted by troubles, and some plants in Japan and Europe underwent maintenance in Apr-May, driving up exports from China. In the latter half year, China's exports may reduce, as inventory at India is high and new plant with capacity of 1.3 mln mt/yr may come on stream in the US.

In terms of demand, consumption of acetic acid in downstream sectors hit high in Mar. Vinyl acetate plant operating rate hiked to reach 80%, and two new PTA plants with combined capacity of 4.5 mln mt/yr got started in Mar or Apr. In the latter half year, downstream market would see limited capacity expansion, and would enter slack demand season with acetic ester operating rate to drop. The peak season for consumption and investment in Sep and Oct should be watched closely.