The head of Asian Methanol Market Service Co. (MMSA) recently stated that strong demand in China is expected to keep acetic acid supply tight in Asia throughout 2006. The country's rapid economic growth and the expansion of polyester fiber production have significantly boosted acetic acid consumption. Currently, China imports around 500,000 tons of acetic acid annually, but domestic supply has not met expectations. Recent plant shutdowns in Taiwan and mainland China, along with reduced operating rates, have pushed Asian spot prices for acetic acid up by $10 to $30 per tonne, reaching $630 to $650 per tonne (CFR Asia) in February.
Analysts note that despite high raw material costs, producers using the methanol carbonylation process can still achieve gross profits of $230 to $260 per tonne, mainly due to the relatively low cost of methanol. They also expect methanol supply to remain tight in the first half of the year, possibly extending into 2007.
According to MMSA, demand for vinyl acetate monomer (VAM) in Asia is projected to grow by 4% over the next five years, while refined terephthalic acid (PTA) demand will rise by 10% annually. This growth is driven by increased PTA production capacity, especially in China. Based on these trends, Asia will require approximately 1.84 million tons of acetic acid for VAM production and 1.17 million tons for PTA in 2006. Total acetic acid demand in the region is expected to reach 4.54 million tons this year, accounting for nearly half of the global demand of 8.28 million tons. Of that, 4.18 million tons will be used for VAM and 1.65 million tons for PTA.
Analysts believe that if Celanese’s Nanjing 600,000-ton-per-year acetic acid project comes online at the end of 2006, it could help ease the supply shortage. However, Celanese has indicated it may delay operations until the first half of 2007 due to market conditions. Nevertheless, the company might accelerate the project if market dynamics improve and profitability increases.
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