Cost plummeted&oversupply, 2022 ethyl acetate fell in shock

In 2022, the domestic ethyl acetate market will fall in shock. According to the monitoring of the business community, the annual decline will be 17.65%, and the price will drop from about 8800 yuan/ton at the beginning of the year to about 7200 yuan/ton. On the one hand, the price of acetic acid fell sharply due to the suppression of cost. On the other hand, the contradiction between supply and demand is prominent. The ethyl acetate industry is highly competitive, with serious overcapacity. The annual average operating rate of the industry is squeezed below 50%. Especially in the second half of the year, the price of ethyl acetate fell steadily, and at the end of November, it hit a new low for the whole year.


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Specific trend:


Phase I: From January to February, the price of ethyl acetate plummeted from 8800 yuan to 7800 yuan/ton, a drop of 1000 yuan. For one thing, acetic acid fell sharply, dragging down the cost of ethyl ester. Acetic acid dropped by nearly 30% in the first two months. Acetic acid enterprises have oversupply, market supply exceeds demand, and the profits of acetic acid enterprises continue to decline. In addition, in February, the construction started to improve. After the festival, the main factories in Shandong stopped bidding. The factories accumulated inventory and the supply was loose. The manufacturers were forced to reduce prices and inventory, which depressed market confidence.


Phase II: From March to the first ten days of May, ethyl acetate came out of the shock and rebound market, mainly because the main factories in Shandong stopped for maintenance for a long time, the pressure of tight supply was greatly relieved, and the demand rebounded seasonally, so the price was relatively strong. At this time, the price of acetic acid has been at a historical low level, and ethyl acetate enterprises have also maintained a high profit margin.


The third stage: from the middle of May to the end of November, acetic acid continued to decline unilaterally, with a drop of more than 20%. The main reason is the steep drop of upstream acetic acid. 6. In July and August, acetic acid dropped by more than 40%. Moreover, the pressure of supply and demand appeared. With the resumption of the main factories in Shandong, the supply increased sharply. Due to the epidemic situation, downstream shipments were not smooth, and the price of ethyl ester fell again and again.


Stage IV: Since December, ethyl acetate has rebounded from the bottom. The direct reason is that Shandong large factories stopped selling and supply was tightened. The indirect reason was that the epidemic situation led to a sharp increase in the price of ethanol, which led to the shutdown of some ethyl acetate enterprises and the resale of ethanol, aggravating the current situation of the shortage of ethyl acetate supply.


2023 Outlook


On the supply side, the supply pressure of ethyl acetate will remain prominent in 2023. First, it is difficult to digest the excess capacity. Especially since the new 350000 ton ethyl acetate unit of Jinjiang Chemical was put into production, the contradiction of oversupply has been aggravated. At present, the capacity of ethyl acetate in China is close to 4 million tons; In 2022, the overall operating rate of ethyl acetate will be 40% – 50%, which indicates that there will still be more than 2 million tons of idle capacity in the future when the demand growth is relatively slow. In addition, domestic production capacity also further squeezed the share of imports. From January to November 2022, the cumulative import of ethyl acetate was 1155.71 tons, a year-on-year drop of 70.58 tons, or 5.76%. It is expected that the import volume will continue to shrink in 2023 with the increase of domestic production. The external dependence of ethyl acetate will also be further reduced.


On the demand side, the downstream applications of ethyl acetate mainly focus on coatings, pharmaceuticals, adhesives and inks. In 2022, due to the epidemic situation, enterprises in the ink packaging and adhesive industry had a great impact, and the demand for ethyl acetate was significantly impacted. It is expected that with the easing of restrictions in 2023, demand will recover. China’s ethyl acetate industry will also get policy optimization, and the market supply and demand will gradually become stable. A steady increase in demand will stimulate prices to return to normal levels.


To sum up, in 2022, ethyl acetate may become the periodic bottom. In 2023, upstream acetic acid has the power to rebound from the bottom, and ethyl acetate is expected to rise with it. However, the problem of oversupply still exists. The supply and demand game will continue. Ethyl acetate will seek an upward breakthrough in price based on the rebalancing of supply and demand, but the upward space should be treated with caution.

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