Supply and demand fundamentals are the main drivers for the global acetyls industry, and moving into the fourth quarter most of the attention is focused squarely on production outages and other supply-side limitations. Some production problems have persisted from as far back as February’s extreme winter weather in the US Gulf Coast, but a series of unplanned outages during the third quarter have put the acetyls sector in a tailspin.
The global acetic acid market began the year with high hopes of a strong rebound in 2021, especially with the prospects of COVID-19 vaccination programs on the horizon. Just as many analysts expected, overall demand throughout the acetyls chain has been strong through the first three quarters of the year. Lifestyle changes dictated by the COVID-19 pandemic continue and are pushing demand for acetyls related-products such as paints, coatings, adhesives, plastics and barrier films. The COVID-19 pandemic itself has become more manageable but still poses a serious risk as more variants emerge.
There are several other factors currently influencing acetyls market activity late in the third quarter -- tight availability of shipping space on key routes, increasing costs of shipping containers/freight fees, and higher energy costs. The systemic problems affecting shipping availability/costs are being felt in many other industries, not just the acetyls sector, and are not expected to improve in the short-term. Logistics are also strained on a region-by-region basis; for example, a lack of qualified truck drivers in the United States and Europe has slowed deliveries in some cases. There have also been severe weather events which have disrupted logistics in all regions. More recently, natural gas prices have skyrocketed in Europe and Asia, which is a worrying trend ahead of the northern hemisphere winter.
Back to Blog
