German Tertiary Butyl Alcohol Prices Stagnates; Anticipated Recovery in H2 2024

Hamburg (Germany): The prices of Tertiary Butyl Alcohol in Germany have remained stable during the last two weeks of May 2024 as market dynamics have balanced out. In terms of production, weak support was observed from the upstream Naphtha market. International crude oil futures have continued their downward trend, with crude oil declining for four consecutive trading days. WTI crude oil has fallen to its lowest point in nearly three months. This decline is primarily due to the high-interest rate environment in the United States, which has pressured demand. Additionally, bearish US inventory data and decreasing geopolitical risk premiums have contributed to the drop in prices.

The demand outlook for Tertiary Butyl Alcohol appears to be improving due to increased inquiries from the downstream solvents industry domestically. Other European markets also experienced marginally increased consumption of Tertiary Butyl Alcohol as consumers worked to replenish their inventories. As per the latest assessment, Tertiary Butyl Alcohol FOB Marl settled at USD 1080/MT in the week ending on 31st May 2024.

Additionally, this year, the petrochemical industry has faced declining demand, an increase in online capacity, historically low earnings across various chemical value chains including that of Tertiary Butyl Alcohol, and slowing progress in circularity. However, industry experts anticipate moderate improvement in the near term, especially towards the end of 2024. Despite these challenges, conditions may now be conducive to a more typical recovery cycle, although it may unfold over several years. Forecasts indicate that demand for petrochemicals, including Tertiary Butyl Alcohol, will grow to match existing and in-progress capacity in some chains, with supply chains maintaining relatively normal price linkages among regions.

Looking at the upstream markets, crude oil prices have declined further, providing weak support for the Tertiary Butyl Alcohol market. Geopolitical threats have decreased as of late. Although there has been no agreement on a truce in the discussions between Kazakhstan and Israel, many parties do not want the dispute to develop further, and the United States and the G7, which support Israel, may put more pressure on Israel in the future. The crude oil risk premium keeps decreasing, eventually easing cost pressures on the Tertiary Butyl Alcohol market.

According to ChemAnalyst pricing intelligence, the prices of Tertiary Butyl Alcohol are anticipated to improve in the upcoming weeks, with demand growth matching or slightly exceeding 2023 levels. Industry experts expect global economic growth in 2024 to be similar to 2023, and destocking headwinds may ease by mid-year as inventories normalize. A strong demand recovery in China remains uncertain but possible. Four key factors that could influence industry profitability are Chinese petrochemical demand growth, industry rationalization, naphtha versus crude price increases, and new trade barriers and duties.