Low Production Cost and Low Demand Ease n-Butanol Prices Across Europe in Early September 2024

In the first half of September 2024, n-Butanol prices in Germany decreased by about 3% due to a drop in production costs. This decline was driven by a fall in feedstock Propylene prices, which were influenced by an influx of competitively priced imports from Asia and North America. This situation improved supply conditions across the market. However, demand for n-Butanol in Europe remained weak, primarily because of continued declines in the construction and automotive sectors, resulting in lower procurement activity.

Propylene prices fell by 5.3% due to cheaper imports from Asia and the Middle East. Additionally, several propylene production facilities faced disruptions: LyondellBasell's plant in Wessling, Germany, with a capacity of 33,333 MT/year, was under maintenance for the entire month of September, while OMV's Burghausen facility, with a capacity of 18,750 MT/year, was put under force majeure due to a power outage. These issues led to reduced n-Butanol production.

Demand for n-Butanol was further impacted by the ongoing downturn in the construction sector. By mid-August 2024, Germany's construction sector experienced a sharp decline, with activity decreasing at an accelerated pace due to weakness in the housing sector. Despite some support from civil engineering, overall price pressures eased, reflected in lower purchasing costs and reduced subcontractor rates, with further depreciations expected in September 2024. The housing sector faced its most significant decline since April, with commercial building projects also falling at their fastest rate since January further corroborating the low demand of n-Butanol from the downstream paints and coating industry. Civil engineering showed some resilience, with its smallest decline in activity since February, which did provide some support to the prices of n-Butanol. The downturn in new orders continued, reaching its two-and-a-half-year mark in August. Authorities reported a 31.5% drop in building permits for apartments in July compared to the previous year, with 21,000 permits granted, down 9,600 from the previous year. Permits were down 28% for the first seven months of the year, highlighting the persistent slump in the construction and real estate industries.

As per expectations prices of n-Butanol are anticipated to rise as the present maintenance season is likely to persist throughout September 2024 in Europe which may limit the availability to produce n-Butanol in Europe. Furthermore, some restocking activities are also anticipated to provide support to the n-Butanol market. This accompanied by the high possibility of anticipated price revisions carried out by major manufacturers such as OQ Chemicals during the festive quarter.