March 2024: Isopentane Prices Surge in US and European Markets Amid Feedstock Challenges

In March 2024, the Isopentane market saw a significant uptick, with prices continuing to increase since January 2024, particularly in the US and Europe. This price surge can be attributed to several factors, including higher feedstock prices, marine freight rates, and fluctuations in crude oil prices due to geopolitical tensions. In the European market, Isopentane prices remained elevated for the third consecutive month, with a roughly 2% increase in March 2024. However, despite this price rise, there's been sluggish demand of Isopentane from downstream, especially in the foam manufacturing segment. Industrial activities in Europe declined in January 2024, with industrial production output in the Euro Area dropping by 3.2% compared to December 2023, similar trend is anticipated for February 2024 too. This decline, along with falling Industrial Producer Price Index, has contributed to weakened demand for Isopentane rom downstream industries. Additionally, rising feedstock Naphtha prices have fuelled bullish market sentiments among manufacturers.

In the US market, Isopentane prices remained high, with a roughly 2% increase driven by high production costs, high feedstock prices and the unstable freight charges. Producer Price Index for Industrial Chemicals improved by 1.7% in February 2024 compared to January 2024, signalling rising Isopentane prices at the industrial level due to increased production costs. These higher production costs of Isopentane have impacted consumer purchasing power. Additionally, slow construction activity persisted throughout the month, with single-family homebuilding maintaining its downward trend amidst higher mortgage costs. Ultimately, US inflation rates rose in March 2024 compared to the previous month, reaching 311 on the Consumer Price Index (CPI), indicating that higher production costs, energy expenses, and raw material prices are being passed on to consumers for goods and services.

On the global scale, crude oil prices have remained above USD 80 per barrel, indicating market tightening due to ongoing OPEC+ production cuts and rerouting of cargoes away from key shipping route like the Red Sea and Suez Canal. These strong crude oil prices have exerted further pressure on Isopentane feedstock, Naphtha prices, keeping them firm within domestic markets. Despite these challenges, there is some relief in March 2024 as marine freight charges have reduced compared to the previous month. This reduction of approximately 23% for the China to North America route and around 27% for North America to North Europe, has contributed to alleviating Isopentane production costs and overall trade dynamics.

According to ChemAnalyst, it is expected that the price of Isopentane could see a further increase in April 2024 in both US and European market. Isopentane price improvement, largely influenced by the volatile nature of crude oil and raw material Naphtha prices, leading to the higher cost.