This week, the European market for 2-Ethylhexanol (2-EH) experienced a 0.8% decline at the start of September 2024, driven by sluggish demand from the downstream plasticizer industry, which is struggling due to weak performance in the construction sector and limited production activity. Despite this drop, feedstock Propylene prices fell by about 3.7%, which could help lower production costs. The ongoing maintenance season in Europe has kept oxo-alcohol manufacturers, including those producing 2-EH, from resuming full production. This has been exacerbated by a 2.4% decline in industrial activity in Germany in July 2024, with no recovery reported in August.

In the feedstock market, Propylene prices in Europe continued to decline due to lower energy values, which pressured market sentiments. Since OQ Chemicals resumed production in early May 2024, 2-EH prices have been at historically low levels, leading to a significant price drop in the German market. With market conditions stabilizing, suppliers have become more confident, leading to a mostly balanced market situation for 2-EH during this period.

Demand for 2-EH from the plasticizer industry remained weak throughout Europe, particularly in Germany. The German construction sector faced a sharp downturn in the third quarter. Activity fell more rapidly due to weakness in the housing sector, although civil engineering showed some resilience, which supported the 2-EH market. Price pressures in the construction sector eased which accordingly imparted a negative pressure on the prices of 2-EH, reflecting a fifth consecutive monthly decline in purchasing costs and a reduction in subcontractor rates, which reached a record low. The sharp decline in total activity in August was mainly driven by the housing sector, which saw its steepest decline since April. Commercial building projects also fell at a faster pace, the quickest since January. However, the civil engineering sector recorded its smallest decline in activity since February, indicating overall sluggish demand for 2-EH. The construction sector's poor performance was further underscored by a two-and-a-half-year low in new orders in August, with firms citing general reluctance among customers partly due to high interest rates. Building permits for apartments in Germany dropped 31.5% in July compared to the previous year, according to statistics released on Monday, highlighting a slump in the construction and real estate sectors. Authorities granted permits for 21,000 apartments in July, 9,600 fewer than a year ago, with permits down 28% for the first seven months of the year. On the industrial front, the downturn in purchasing activity accelerated in August due to falling workloads and efforts to deplete purchase stocks, leading to low procurement activities of 2-EH. The decline in buying levels was the most significant in ten months, while pre-production inventories decreased sharply but at a slower rate, the weakest since April 2024.

As per market expectations, prices of 2-EH across the European market are anticipated to decline as the downstream construction industry showed no signs of recovery, accompanied by the depreciation in the prices of feedstock Propylene, which were recorded to have been negative on the back of lower energy values.