Dwindling Demand and Rising Construction Costs Impact Butanediol Prices in Germany

Germany- Butanediol prices in the German market continued to move slowly as the construction, paints, and coating sector lost its shine throughout the month, proportionally impacting the overall market dynamics of Butanediol. Elevated interest rates and surging construction expenses have significantly dampened the desire for new construction and paint projects in Europe. Thus far, existing initiatives and a heightened emphasis on sustainability have prevented a contraction in construction volumes. However, we anticipate the onset of a substantial decline starting in 2024. Butanediol has major applications in the paints and coating sector, and the slumped demand accompanied by the reduced number of new orders impacted the overall prices of Butanediol. On the week ending September 8th, Butanediol prices settled at USD 2112 per MT, FD Karlsruhe in the German market.

Construction production in the EU remained consistent with the same period from the previous year. Companies still have a robust backlog of projects, guaranteeing work for 8.9 months at the beginning of the third quarter of this year. The furnishing and paints section also slowed, and market participants predict declining Butanediol prices further.

Nevertheless, there are evident indications that construction volumes will soon begin to decrease, primarily due to the sector's late cyclical nature. Both homebuyers and businesses are hesitant to invest in new properties due to the weakened economy, elevated interest rates, and rising construction expenses. Given the lengthy lead times involved in construction, it may take some time before these factors noticeably impact construction output levels.

Many governments are actively supporting sustainability initiatives, and the surge in energy prices has acted as an additional incentive. While energy prices have started to stabilize this year, interest in energy-efficient measures has slowed down but remains significantly high. Analysts and traders predict European oil refineries are gearing up for a less busy autumn maintenance season than usual. They are doing so to maximize their profit margins amid low fuel inventories and strong demand for gasoline and diesel.

Major fluctuations in the prices of Butanediol depend upon the demand strength and feasibility of the Butanediol with end-use manufacturing units. However, the continuous rise in crude oil and naphtha prices governed the overall prices of Butanediol.

This reduced refinery maintenance schedule implies that Europe will be less dependent on fuel imports at a time when global prices are high. However, it also means that the remaining refineries must purchase crude oil at elevated prices, potentially leading to lower profits.