Global demand for acetic acid has been steadily increasing over the last 10 years. In 2000, global acetic acid demand stood at 6,112,418 tons, before increasing to 10,246,522 tons in 2011, as per GBI Research. A significant portion of this increase in demand was from the Asia-Pacific region and the US, and the same trend is expected to continue in the forecast period. USA was the second-largest consumer of acetic acid after China in 2011, and a complete recovery in the US economy will boost the global growth of acetic acid in the future. The Asia-Pacific region will continue to account for more than 72% of global acetic acid demand in 2020. Global demand for acetic acid is expected to grow at a Compound Annual Growth Rate (CAGR) of 4.7% between 2011 and 2020, to reach 15,539,000 tons in 2020. The demand for acetic acid was highest in Asia in 2011, with China driving the majority of the demand globally. Asia accounted for more than 60% of world consumption in 2011, and China accounted for almost 30% of that. With new capacity coming on-line in the forecast period, China should continue to be the engine of global acetic acid growth over the next few years. Demand in advanced countries such as Japan and Germany has largely been stabilized. Emerging economies like China and India, because of their giant populations, have huge consumption potential and offer tremendous growth opportunities. This is reflected in the high growth rates seen from acetic acid downstream segments such as Vinyl Acetate Monomer (VAM), Purified Terephthalic Acid (PTA), ethyl acetate and acetic anhydride in these countries. Asia-Pacific will continue its growth momentum in the coming years and stands to be the global growth engine for the acetic acid market.
Acetic acid is an important chemical with applications in several downstream industries like textiles, food processing and several other industrial chemical processes. Acetic acid prices are mainly driven by the prices of feedstock and methanol and downstream demand for its derivatives, including VAM, PTA, acetic anhydride and ethyl acetate. VAM is the largest single end-use for acetic acid and is mainly used in paints, adhesives and coatings. PTA is mainly used in the manufacture of polyester and fibers. An increasing trend of acetate esters being used mainly as solvents for inks, paints and coatings has also been observed in the last few years. VAM, PTA and ethyl acetate were the leading end-use segments for acetic acid in 2011, with 3,466,095 tons, 2,169,884 tons and 1,312,543 tons of demand, respectively. Together they accounted for over 75% of the global acetic acid demand. Acetic anhydride and other end-use sectors accounted for the remainder of global end-use demand for acetic acid in 2011, with 1,055,826 tons and 2,194,553 tons, respectively. During the forecast period to 2020, the growth of PTA and ethyl acetate segments is expected to overtake VAM. On the technological front, emerging technologies for producing chemicals and derivatives are offering promising opportunities for growth within the industry. Accordingly, manufacturers of acetic acid are increasingly adopting these technologies over older technologies such as the methanol carbonylation process. Compared with the more traditional methanol carbonylation process, next-generation technologies like BP's Cativa and Celanese's AO-plus (Acid Optimisation Plus) deliver significant savings in variable costs, as well as lower capital costs for the construction of new plants. The other advantages offered by these new technologies include increased capacity, enhanced production efficiency, reduced energy consumption by approximately 30%, and lower operating costs. An increasing trend towards the adoption of these new technologies is likely to be seen across the world in the coming years, which will drive the global growth of the acetic acid market.
As per an earlier report by Global Industry Analysts, Inc, growth in demand for acetic acid is in line with growth in GDP for most developed economies, as they are the harbingers of fiscal/monetary/economic policies and consumer confidence. The global demand for acetic acid declined slightly during recent times mainly due to the slump in the macro economy. The market, however, is expected to grow robustly in the near future, leveraging on strong growth emanating from Asia-Pacific, particularly from China. Rapid growth of acetic acid market in China has encouraged investors to pour million of dollars in establishing acetic acid units. Influx of advanced technology and investments from multinational companies are expected to provide the required impetus for fast paced growth. Taking cue from the burgeoning demand from the developing countries, acetic acid manufacturers worldwide are investing in capacity expansions and new plant installations. Previously, backward integration reigned in the industry, with companies increasingly making investments through acquisitions and strategic sourcing deals to keep the tabs on the soaring raw material prices and slow demand. This had largely limited capacity expansions in the recent years. But now, with a robust recovery upstaged in the downstream and upstream markets, acetic acid is set to grow steadily. Keeping in view the brightening prospects, acetic acid manufacturers are reviving investments in capacity expansions and facility revamps. However, much of the new cap is charted for the burgeoning economies of Asia, especially China, where the growing demand justifies the capacity investments. Asia-Pacific dominates the global acetic acid market in terms of market size and growth. Presently, a large percentage of the demand for acetic acid in the region is met by imports. However, on-going massive capacity expansions and establishment of newer factories in China is expected to boost production in the region and reduce its dependence on imports. India also constitutes a lucrative market for manufacturers of acetic acid. The region is expected to pose strong demand for VAM in the near future. The United States trails Asia-Pacific in terms of acetic acid consumption. Affected by the recent turmoil in the global economy, the US market for acetic acid recorded a slight decrease in the demand in 2009. The market in recent times was characterized by supply crunch and soaring prices of raw materials such as methanol and natural gas among others. Exports also declined drastically from the last quarter of 2008, due to the weak business scenario in Europe and Latin America. The on-going capacity expansions and establishment of newer facilities in China are likely to further negatively impact the region’s acetic acid exports in the near future. In terms of end-use segments, Vinyl Acetate Monomer (VAM) represents the largest end-use market for acetic acid. On the other hand, Purified Terephthalic Acid (PTA) is the fastest growing end-use application, registering a CAGR of more than 4.0% over the analysis period. Other leading end-use segments include Acetic Anhydride and Ethyl Acetate.
On the technological front, emerging technologies for producing chemicals and derivatives are painting greener avenues for growth within the industry. Adoption of innovative and path breaking technologies are providing competitive edge to the companies to enhance their profit margins vis-á-vis competitors. Accordingly, manufacturers of acetic acid are increasingly adopting these technologies over age-old technologies such as low-water technology. Saturation in western economies and mushrooming growth in Eastern economies have spurred globalization of industries. Together with the opportunities to expand presence, globalization brought with it a host of problems that are region-specific and hence, the regional governments’ foreign trade and investment policies and formation of free trade areas are of critical importance. Environmental concerns represent one of the major factors influencing the market for acetic acid. Demand is expected to rise as the chemical replaces solvents in printing inks, coatings and adhesives. Major players in the industry are striving to grow in the highly competitive environment by investing in international markets, and thus going global.