In the latter half of July 2024, the French Butyric Acid market maintained a generally stable outlook due to a well-balanced supply and demand dynamic. However, production costs of Butyric Acid were influenced by a 6% increase in feedstock Propylene prices during the second half of July. This rise in Propylene prices was driven by supply constraints and depleted stockpiles, prompting buyers to replenish their inventories ahead of the summer holidays when demand typically softens. Despite these supply pressures, market participants have been cautious, making only essential purchases amid uncertain short-term market prospects for Propylene and Butyric Acid

There has been a notable reduction in imports, with key Asian and Middle Eastern suppliers hesitant to offer materials due to steep freight rate hikes and extended transit times. This has made imported materials less competitive, leading local suppliers to push for higher prices. Additionally, planned Propylene plant overhauls in August and September have further motivated sellers to seek price increases, although the rise has been modest so far in July. Propylene producers across Europe were reported to have adjusted their plant operations to align with weak demand, and a significant drop in stockpiles has led many downstream Propylene industries to depend more on domestic suppliers due to high freight costs. This situation has rendered arbitrage from North American, European, and Middle Eastern markets impractical, which further influenced the prices of Butyric Acid

On the demand front, Butyric Acid faced challenging conditions. The chemical intermediate industries continued to experience a downturn in July, leading French suppliers to destock and streamline their inventories, which improved supplies of Butyric Acid. However, the animal fodder sector showed positive demand for Butyric Acid, bolstered by a 4% increase in EU beef production in the first half of 2024 compared to the same period in 2023. Beef production grew by nearly 60,000 tonnes (4%) from the first quarter of last year, with significant increases in Italy and Poland, increasing the consumption of Butyric Acid. Italian beef production rose by 25,000 tonnes to 161,000 tonnes, though it remains 14% below 2022 levels. Poland’s beef production surged 16% to 159,000 tonnes from the previous year. Germany, the EU’s second-largest beef producer, saw a 2% increase to 256,000 tonnes. France, the largest beef producer in the EU, recorded 327,000 tonnes for the first quarter of 2024 but experienced the largest production decline of 8,200 tonnes from 2023, providing some support to the European Butyric Acid market.

Overall, expectations prevail that prices of Butyric Acid are expected to continue to increase as demand from the animal fodder sector increases as beef production grows, which is the main staple across Europe.