German Butanediol Prices Find Stability Amid Sluggish Demand from the Construction Sector

Houston- Butanediol prices in the German market have continued to remain at a stall in the last weeks as the demand for the product from the paints and coating sectors in the regional market continues to increase. The construction and housing index of the German market is still struggling to rebound and find a strong place amidst continuous economic uncertainties. Butanediol prices in the German market were observed at USD 2015 per MT, FD Karlsruhe, in the first week of November 2023.

Economic experts anticipate that while headline inflation is expected to decrease in the initial months of 2024, the core inflation rate is likely to reach a stable level and believe that underlying inflation will continue to be considerably higher than the preferred level by the ECB in the coming year. Central bankers view higher-than-expected inflation as a significant risk, as it could lead to an extension of the central bank's efforts to tighten monetary policy, resulting in a longer period of elevated interest rates and enhancing the operational cost of Butanediol.

In October, the survey revealed a record number of companies reporting abandoned projects. During October, 22.2% of companies reported that their projects had been canceled, which was a slight increase from the previous month's, showcasing a decline in the demand for Butanediol from the paints and coating sector.

Major facets impacting the overall price range of Butanediol included the slow and steady prices of feedstock (Maleic Anhydride) in the domestic market, impacting the overall production cost and the delivery cost of Butanediol. Moreover, it was also noted that the situation is deteriorating as more projects fail due to rising interest rates and increased construction costs. In the residential construction sector, new business remains quite low, and Butanediol manufacturers' backlogs of orders are shrinking. Market players also pointed out that nearly half of all residential construction companies are now contending with a shortage of Butanediol and derivatives orders, and this number continues to grow. The IMF has issued a warning that the conflict in the Middle East involving Hamas and Israel has the potential to increase inflation while central banks are working to reduce it.

European natural gas traders are beginning to observe early indications that winter demand might rise, introducing additional uncertainties to a market that has primarily concentrated on supply disruptions. As per ChemAnalyst, the Butanediol prices in the German market are expected to move steadily further, with a slight decline as the European market may continue to witness a decline from the construction, paints, and coating market.