Global 2-EH Prices Witness Bearish Market Amidst Improved Supply And Weak Demand Conditions

Towards late November 2024, the global 2-EH (2-Ethylhexanol) market exhibited a variable market situation, with a stable situation being witnessed in the North American market but a bearish trend across Southeast Asian and European markets. Overall demand conditions from the downstream plasticizers industry remained sluggish due to the moderate performance of the construction sector, which kept the demand conditions for 2-EH from the plasticizer industry unfavorable, amidst ample supplies in the market as suppliers in these regions remained under pressure to liquidate inventories as the financial year neared its end. Furthermore, global 2-EH prices faced pressure due to increased oxo-alcohol capacity from China, where domestic oxo-alcohol production capacity surpassed over 1 million tonnes. This resulted in price competition across the global oxo-alcohol market, including 2-EH and also played a pivotal role in keeping the market mostly bearish

Across North America, demand for 2-EH remained sluggish across the domestic market and in the exporting markets, amidst improved supply conditions as suppliers attempted to liquidate inventories. Most of the suppliers expected that demand for 2-EH from the downstream plasticizer industry would unlikely gain momentum before the new year, which resulted in ample availability in the market. Export conditions remained somewhat favorable as, according to data released by the Association of American Railroads, chemical railcar loadings were up to 33,170 for the week ending 16 November, a 3.6% increase on a weekly basis. In the domestic market, housing starts slipped 3.1% in October with declines in the Northeast and the South (likely impacted to some degree by Hurricanes Helene and Milton). Single-family starts were down 6.9%. Forward-looking building permits were also lower by 0.6%, which continued to put pressure on 2-EH prices across the US market. This is why prices of 2-EH were reported to have depreciated by 3.4% before stabilizing during this week. Furthermore, the availability of feedstock Propylene (Refinery Grade) was reported to have been ample, as refinery rates across the US inched up from 90.2% in the week ending November 15, 2024, to 90.5% in the week ending November 22, 2024, which resulted in ample production of 2-EH across the US market, continuing to impart downward pressure on the market.

Across Europe, prices of 2-EH depreciated by 3.7% and settled at historically low prices after maintaining stability during this week, as demand conditions remained subdued amidst improved availability in the market. In terms of supplies, compared to other oxo-alcohols, namely n-Butanol and Iso-Butanol, the availability of 2-EH remained the greatest, prompting prices to depreciate over the week. Production costs also eased as feedstock Propylene prices depreciated by approximately 4.1%, which consequently eased production costs of oxo-alcohols, including 2-EH, across Europe. Export conditions also remained unfavorable as the arbitrage between in and out of Europe remained closed, resulting in the accumulation of inventories, prompting prices to depreciate. Suppliers remained further under pressure as the mounting pressure of the impending end of the financial year compelled them to liquidate inventories, resulting in greater availability of material amidst sluggish demand from the construction and automotive industries. Market participants further noted that demand conditions for 2-EH from the downstream plasticizer industry are expected to remain sluggish until mid-December 2024, further indicating a bleak outlook on the prices of 2-EH.

However, across the Southeast Asian market, the 2-EH market initially recovered with prices increasing by approximately 7% during the first half of November 2024 as the operating load of 2-EH enterprises had declined, leading to a reduction in the supply of 2-EH. The shutdown of LihuaYi Enterprise's 2-EH equipment has led to a reduction in the market supply of 2-EH, contributing to the upward trend in its prices. However, as the week progressed, prices of 2-EH fell by 5% during the week ending November 2024, thereby losing the gains witnessed in the first half of November 2024, as the operating load of 2-EH enterprises increased, the supply of 2-EH increased, and the price of 2-EH fluctuated and fell. The supply and demand for 2-EH experienced moderate growth, weakening the market support for 2-EH, which led to a fluctuating decline in its prices. Moreover, Lihuayi Enterprise's 2-EH equipment was restored, and the supply of 2-EH in the market increased, weakening the support for the rise of 2-EH, prompting prices to fall.

Demand conditions for 2-EH from the downstream plasticizer industry remained unfavorable as the economic stimulus packages released by Chinese authorities failed to generate enough momentum. Market participants further reported that procurements witnessed earlier during late November 2024 were more sentiment-based than actual improvements in demand conditions, which resulted in the Chinese 2-EH market losing support.

Overall, prices of 2-EH across the Southeast Asian, US, and European markets are expected to depreciate as the 2-EH market enters a destocking cycle with suppliers liquidating inventories and demand conditions unlikely to witness much improvement before the middle of December 2024.