The European and Japanese n-Butanol market witnessed a bullish situation during the month of January 2024 due to increasing prices of feedstock Propylene across the exporting German market which consequently resulted in expensive imports into the Japanese market.

Prices of feedstock Propylene in Germany displayed an increment of around 5% in Germany which consequently resulted an increment of approximately 2% in the prices of n-Butanol. Likewise, prices of n-Butanol across importer Japan also witnessed an increment of 2%.

In terms of supply, increments in the prices of feedstock Propylene in Germany were largely attributed to the willingness of traders to restock inventories of Propylene as demand from the downstream Polypropylene sector was anticipated to materialize. The increments in the prices of Propylene are attributed to production outages across the exporting United States which consequently resulted in higher production costs of n-Butanol in Germany.

An unanticipated outage at Enterprise Products Partners' Mont Belvieu in the US plant of their newest 750,000 mt/year PDH unit further exacerbated the scarcity of feedstock propylene for n-Butanol manufacturing. Due to deteriorating weather conditions nationwide, several other plants of feedstock Propylene in the USA were also reported to have declared force majeure during the first half of January 2024. Notable examples of these plants include BASF SE, Dow Chemicals, ExxonMobil, INEOS, and Shell Chemicals LP, among others, with an average operating capacity of 51% of total capacity.

In terms of demand, the demand of n-Butanol from the downstream paints and coating remained largely subdued in Europe. The demand of n-Butanol from the paints and coating industry continued to be detrimentally affected by underperforming construction industry which continued to be dull in January 2024 marking it the fourteenth consecutive month of contraction. All three segments of the construction sector, namely housebuilding, commercial building and civil engineering activities showed substantial declines. With investment sentiments recorded to be historically low, demand for building materials continued to contract for the tenth consecutive month, further casting a negative outlook for n-Butanol.

In Japan, the supply disruptions prevailed due to Sea of Japan Earthquake which occurred during New Year’s holiday. Moreover, the Sea of Japan earthquake resulted in major tsunamis and fires which were reported to have destroyed thousands of homes. Worsening weather conditions further added challenges in the supply chain system. Furthermore, prices of n-Butanol are expected to increase in Japan as demand from the paints and coating industry is expected to rebound as rehabilitation activities prevail, further complemented by the rising prices of feedstock Propylene and Crude Oil.