Executive Summary

The Asia-Pacific ethyl acetate market is experiencing significant pressure on producer margins as feedstock costs escalate across the region. In India, ethyl acetate prices have surged by nearly 18% during the first half of December, driven by higher acetic acid and ethanol costs combined with Indian rupee depreciation. With total production costs estimated at USD 841/Mt against current market prices of USD 833/Mt, producers are operating at marginal losses of approximately USD 8/Mt, indicating significant upside pressure on prices unless feedstock costs ease.

Stoichiometric Reaction

Ethyl acetate is an ester produced through the esterification reaction of acetic acid and ethanol:

Feedstock Dynamics

Feedstock acetic acid and ethanol prices across the Asia-Pacific region rose for a second consecutive week, supported by tightening supply and firmer downstream demand.

Key Market Observations:

• India Acetic Acid Tightness: In India, acetic acid availability has tightened amid reduced import arrivals and a simultaneous surge in domestic demand. India's monthly acetic acid consumption is estimated at around 145,000 tonnes, with nearly 93% of the requirement met through imports, while the balance is supplied by GNFC.
• GNFC Price Hikes: GNFC announced two price hikes for acetic acid during the month, with the current domestic price assessed at Rs 38,000/tonne Ex Bharuch and Import price assessed at Rs 39,500/Mt Ex Mumbai & Kandla.
• China Production Decline: In China, acetic acid operating rates declined sharply, with the average production run rate falling to 68% in December 2025, marking a 24% month-on-month drop, primarily due to multiple plant turnarounds and intentional production rate reductions.
• Downstream Strength: The tightening feedstock scenario was reflected in downstream markets. Bulk acetic anhydride prices in China increased by nearly 4% to $403/tonne, while Indian prices rose by around 7% to Rs 63,000/tonne, indicating an improvement in downstream demand conditions.
• Healthy Conversion Economics: Methanol to Acetic Acid conversion remains above breakeven +30$/mt indicating healthy conversion for Acetic Acid manufacturers.

Methanol to Acetic Acid Conversion Analysis

For margin and spread analysis, it is generally assumed that around 0.60 kg of methanol is required to produce 1 kg of acetic acid via the methanol carbonylation route. In addition to feedstock costs, fixed and variable conversion expenses are typically estimated at around USD 100 per metric tonne of acetic acid, covering utilities, catalysts, and operating costs.

Ethyl Acetate Downstream Dynamics

Ethyl acetate is an ester which is typically produced by the reaction of an acid (Acetic Acid) with an alcohol (Ethanol). The downstream market is experiencing significant price pressure driven by feedstock cost escalation.

India Market Surge and Pricing Pressures:

• Dramatic Price Rise: In India, primary downstream ethyl acetate prices surged by nearly 18% during the first half of December, driven by higher feedstock costs and depreciation of the Indian rupee against the US dollar.
• Producer Price Actions: Domestic producer GNFC increased ethyl acetate prices twice during the first half of December 2025, with current prices assessed at around Rs 69,000/Mt, while other domestic manufacturers are quoting significantly higher levels, above Rs 73,000/Mt.

Production Economics and Margin Compression

Ethyl acetate is produced through the esterification of acetic acid and ethanol. Based on prevailing feedstock prices, ethyl acetate production economics remain under significant pressure, with producers operating at marginal losses.

Critical Outlook: Against a current ethyl acetate market price of USD 833/MT, producers are operating at a marginal loss of around USD 8/MT, suggesting further upside pressure on prices unless feedstock costs ease. This situation indicates that the market may need a price correction to restore healthy producer margins.

Market Implications

• Price Upside Risk: The current margin compression indicates significant upside price risk for ethyl acetate unless feedstock costs decline materially.
• Supply Dynamics: Chinese production rate reductions (down to 68%) for acetic acid will likely continue to support tight feedstock availability and higher downstream prices.
• Currency Factor: The Indian rupee depreciation is adding an additional layer of cost pressure for Indian producers relying on imported feedstocks.
• Demand Support: Despite margin pressures, downstream demand remains firm, particularly in India's chemical and solvent sectors, which is providing some market support.

Conclusion

The Asia-Pacific ethyl acetate market is at an inflection point. While feedstock costs have escalated significantly, bringing producers into loss-making territory, the market dynamics suggest that prices will need to move higher to restore viable margins. Stakeholders should monitor acetic acid and ethanol price movements closely, as even modest declines in these key feedstocks could shift the market balance significantly. In the near term, further ethyl acetate price appreciation appears likely unless feedstock pressures ease.