Fresh imports of Acetic Acid to pull down prices in India; persistently strong demand noted in Ahmedabad – 24 Mar 2014

The price for Acetic Acid has been fluctuating considerably in the Indian markets this month, primarily due to the import price parity practice adopted by Acetic Acid  manufacturers in India. GNFC (Gujarat Narmada Valley Fertilizers and Chemicals Ltd.), which is the largest manufacturer for Acetic Acid in India, has already revised the price for the chemical twice this month. Indianpetrochem surveys the market sentiment for the chemical in the country and gives the future outlook for Acetic Acid in the near term.

Indianpetrochem notes distributed demand for Acetic Acid across various trading hubs in India. The website observed sluggish demand in Delhi and Mumbai, whereby the traders had a general expectation that the demand would gain momentum after the year end financial closing. However, our market reporters in Delhi have on an average noted moderate demand for the chemical throughout the year, suggesting that most of the end -users are not based out of the Delhi market.

Interestingly, the websites conversation with traders in Ahmedabad market indicated that there has been strong and steady demand for the chemical in that region.

"Most of the end-user manufacturing industries for Acetic Acid, mainly dye manufacturing and chemical intermediaries units for Acetic Acid such as Acetic Anhydride and Ethyl Acetate, is based out of Gujarat. As such the demand for Acetic Acid is persistently strong in the market", a prominent trader told the website.

GNFC (Gujarat Narmada Valley Fertilizers and Chemicals Ltd.), which is the largest manufacturer for Acetic Acid in India, has already revised the price for the chemical twice this month. On 8th March, 2014, GNFC did a downward price revision for its Ex-factory price by Rs. 2.50 per kg to Rs. 41.80 per kg (exclusive of all taxes). This downward price correction was done in line with the downward price revision for Methanol in the same month due to oversupply of imports at the port.

On 14th March, 2014, GNFC increased its Ex- factory price for Acetic Acid by Re. 1 a kg to Rs. 42.80 per kg (exclusive of all taxes). Market participants feel that the downward price revision by GNFC was done in order to remain competitive against imports, whereby traders accounted limited availability of imported Acetic Acid (which in return pushed up the bulk prices) was the key reason to increase the price basic price for the chemical.

According to information gathered by Indianpetrochem, its noted that 10,000 metric tonne import shipment of Acetic Acid is expected to land at JNPT (Jawaharlal Nehru Port Trust) in Mumbai on 27th, March , 2014.

In line with this a prominent trader told Indianpetrochem, "There is a market expectation that the bulk prices for Acetic Acid are going to drop to Rs. 38 per kg (exclusive of taxes) in the first half of April as a result of huge import inventories in the market, as such we also expect GNFC to do a downward price revision for Acetic Acid somewhere around about the same time".

Overall, given the current market situation there is an expectation that as huge import inventories for Acetic Acid fills the markets, domestic manufacturers are most probably going to do a downward price revision for the chemical in the near term. As a consequence, its speculated that the overall the price for Acetic Acid will drop in India amid good demand position in the short -term.