ACRYLIC ACID MARKET ANALYSIS

Crude oil prices are highly volatile and dependent on geopolitical factors across the world. Acrylic acid is primarily produced from propylene, a petroleum derivative. Over 70% of the costs associated with acrylic acid production are attributed to the raw materials used, primarily propylene. Therefore, fluctuations in crude oil prices have a significant impact on production costs for acrylic acid manufacturers. When crude oil prices rise sharply, it increases input costs substantially for acrylic acid producers, reducing their margins. Higher costs are often passed on to buyers in the form of increased acrylic acid prices. This price rise restricts the demand growth from end-use industries. On the other hand, an unexpected decline in crude oil prices may also restrain growth if it undercuts sales prices to unsustainable levels, limiting investments in capacity additions.  The uncertainty and unpredictability associated with volatile crude oil prices pose challenges for long-term strategic planning and capacity expansion for acrylic acid producers. According to the World Bank pink sheet data from 2021-2022, crude oil prices fluctuated between USD 40-120 per barrel due to demand changes caused by the COVID-19 pandemic, geopolitical conflicts, and production cuts. Such wide swings make it difficult for acrylic acid companies to determine optimal plant utilization rates and capacity expansion plans. High volatility discourages investments aimed at bridging the demand-supply gap in the market. It also restricts R&D spending towards the development of more advanced and sustainable acrylic acid production technologies. Overall, unstable crude oil pricing creates an unfavorable business environment limiting the global acrylic acid market's growth potential.

Opportunities: Demand from the growing superabsorbent polymers sector

Demand from the growing superabsorbent polymers sector acts as a driver. Also, usage of acrylic acid in surface coatings and adhesives sees increased demand from construction and automotive industries.