High Demand Drives the Isopentane Price Trend in US and Europe in Early May

First half of the May 2024, saw a global surge in Isopentane prices, impacting both the US and European markets, with the driving factors remaining consistent from the previous month.

In USA, the prices of the Isopentane surges in the early half of the month around 1% after increasing around 2% in the previous month. The rising price trend of Isopentane in the USA during April 2024 stems from multiple interrelated factors. Firstly, despite a downturn in the manufacturing sector overall, the US Isopentane market continued its upward trajectory, primarily driven by heightened demand from the downstream packaging industry. This surge in demand, combined with limited inventory levels, exerted upward pressure on prices.

The increase in Isopentane prices is also linked to the enhancement in the construction sector, the latest report indicates that construction activity surged last month, reaching its highest rate of expansion in over two years. Both housing and commercial projects gained momentum, contributing to this growth. April's uptick in activity marked the second consecutive month of expansion, a milestone not seen in nearly two years. Additionally, the escalation in Brent crude oil prices during April, attributed to falling global oil inventories and geopolitical tensions, notably the conflict between Iran and Israel, contributed to rising input costs for industrial chemicals like Isopentane. The consecutive monthly increases in crude oil prices further exacerbated the situation, impacting the costs of raw materials used in Isopentane production. The Industrial Chemical Producer Price Index (PPI) surge in April indicated heightened production costs, coupled with reduced factory operations, likely constraining Isopentane supply in the USA. As producers adjusted prices upwards to offset rising costs, consumers faced higher prices due to the combined impact of constrained supply and increasing production expenses. Furthermore, the constrained supply of Isopentane prompted increased demand from downstream industries, particularly in expanded polystyrene production. This tight supply condition led downstream users to seek sufficient quantities of Isopentane, further driving up demand.

Similarly, the European market of Isopentane continued the same trend as US market in the first half of the month around 1%, after an inclination of around 2.2% in the previous month mainly in Belgium. The rising Isopentane prices in Belgium in April 2024 were driven by increased demand from the downstream packaging industry, particularly for expanded polystyrene (EPS) and extruded polystyrene (XPS) foams. Limited inventory levels exacerbated this demand, likely pushing prices higher. Isopentane supply remained constrained due to reduced industrial production, prompting heightened demand from downstream users seeking to secure adequate material quantities for production requirements.

Conclusively, analysts anticipate the Isopentane prices are expected to continue rising similarly in May 2024 due to the significant gap between supply and demand.