Over the past week, Butyric Acid prices have risen by about 0.5% in the European market due to reduced production and moderate demand conditions. The slow rise in the prices of Butyric Acid is attributed to many feedstock Propylene plants undergoing maintenance turnarounds contributing to the low production of Butyric Acid. Production costs of Butyric Acid continued to rise as indicated by the increment of approximately 4% in the prices of key feedstock Propylene.

Increments in the prices of feedstock Propylene were largely a result of the import market being barren with low supplies arriving from North America and Middle East markets. Limited imports from the North American market were largely the result of many plants being kept under force majeure and maintenance turnarounds despite some facilities having retuned to production. Across US upstream propane prices stand at $2.458 per gallon, marking an increase of $0.018 from the previous week, data from EIA showed, which further corroborated to the higher prices of feedstock Propylene across Europe. Furthermore, supplies from the Middle East were also recorded to have been limited as Propylene production was recorded to have been lower in Saudi Arabia with market participants citing unfavourable export conditions amidst security tensions at the Red Sea and low demand for PP in Turkey. Market insights further revealed On August 25, clashes between Hezbollah and Israel heightened regional conflict risks. Tensions eased later when Hezbollah ended its initial response phase, but supply chain disruptions continued, delaying propane and propylene deliveries to Europe and reducing Butyric acid production.

Across domestic Europe, producers were recorded to have been running their plants at reduced rates to align production with weak demand. Buying activity is expected to return to normal levels after the summer holidays which may have led to the increment in the prices of Butyric Acid. Adding fuel to the fire, was Shell Chemicals declaring a force majeure on its cracker at Moerdijk, Netherlands having a capacity of 510,000/MT on August 1, 2024, with duration of the shutdown being uncertain which is one of the arterial suppliers of Propylene across European market, further leading to moderate production of Butyric Acid. Furthermore, the European Propylene market is expected to see a heavy maintenance season between August to November, with five crackers set to close during this period. LyondellBasell, BASF and BP are set to close their crackers located in Germany, with MOL group and Slovnaft shutting their crackers in Hungary and Slovakia, respectively. Spot prices rose on the week amid the pickup in restocking activity, with most attention being in August, further pushing up production costs of Butyric Acid.

However, demand conditions for Butyric Acid remained moderate across Europe from the downstream animal feed and fodder sector EU compound feed production to decrease in 2024. Based on data collected by FEFAC, industrial compound feed production within the EU27 is expected to decrease in 2024 by 0.3 % compared to 2023.

Additionally, cattle feed production is anticipated to remain relatively stable, with only slight increases or decreases based on regional conditions. Ireland expects modest growth in cattle feed due to a delayed grazing season why may increase demand for Butyric Acid. Conversely, the Netherlands anticipates further decreases in dairy and beef sectors (approximately -5%), driven by ongoing regulatory and environmental challenges, indicating moderate demand for Butyric Acid.