European n-Butanol price inflates amidst price hikes and prevailing supply constraints

Prices of n-Butanol across the German market have witnessed an inflation of approximately 60% during March 2024 due to tight supply conditions, increasing prices of feedstock Propylene the recent announcements of prices hikes initiated by major oxo-alcohol producers owing to tight supply conditions.

With OQ Chemicals being recorded to have declared a force majeure at its production site at Oberhausen, Germany on February 27, 2024, and not being reported to commence operations since, supply conditions regarding oxo-alcohol (including n-Butanol) the availability of the product was recorded to have been largely restrictive. As response, OQ Chemicals announced prices hikes EUR 100/MT of all oxo-intermediates including n-Butanol for the European market on press release dated February 15, 2024.  Complementing to the inflation in the prices of n-Butanol, feedstock Propylene prices also increased by approximately 4% in March 2024 which also prompted production costs to rise.

In line to the global increment of in the prices of n-Butanol, Eastman Chemicals, another leading producer of oxo-alcohol has also decided to increase prices of the product by USD 110/MT for the North and South American markets, on a press release dated March 04, 2024.

In terms of demand, the demand for n-Butanol was largely supported by the automotive paints and coating sector across Europe. Leading with France and Italy, new car registrations within the EU rose by 10.1% in February compared with the same month last year, and hybrid-electric vehicles saw the heathiest increase. In France, Italy, Spain, and Germany, registrations increased by 13%, 12.8%, 9.9%, and 5.4%, respectively. While new electric car sales jumped the most in February 2024, hybrid-electric cars took the lead last month, with a surge of 24.2% across, the UK and the EFTA member states, according to the European Automobile Manufacturers Association (ACEA). Overall automotive sales are further expected to increase in March 2024 as the European automakers completed their quarterly sales targets.

However, the primary demand of n-Butanol of the paints and coating industries continues to remain subdued as the German construction industry continued to remain mired in a deep downturn towards the termination of first quarter of 2024. Prices of new homes, new single-family houses, duplexes, and condos, dropped by 1.0% in the first quarter, for an annual decline of 3.2%, and are down by 4.5%. This continued to have a negative demand of n-Butanol from the downstream paints and coating industry. Complementing the residential construction, commercial construction activities also witnessed significant contractions. However civil engineering activities continued to show resilience which may have provided somewhat momentum to the n-Butanol market.