Tetrahydrofuran Prices are Declining, Accompanied by Feedstock Costs

In Europe, Tetrahydrofuran prices have dipped slightly towards the start of the fourth quarter of 2022 due to weakening upstream (Butanediol) prices. The demand for the product from downstream solvents for polymer, paints, and coating sectors remained slow in the first week of November. The price dynamics of Tetrahydrofuran cumulatively were stable in previous weeks as the suppliers witnessed continuous demand for the product in the regional market. In the initial week of the last quarter of 2022, the prices of Tetrahydrofuran in the German market ranged between USD 3480 to 3420 per MT, FOB Hamburg.

Growth is slowing down across Europe due to the Russia-Ukraine war, and inflation is not showing any signs of slowing down in the regional market. The European region has an economic recession and a high inflation rate, consequently increasing commodity prices. The total pause of Russian natural gas exports to Europe and a harsh winter may cause shortages, rationing, and GDP losses of up to 3% in some central and eastern economies. In addition, it might also lead to another round of inflation on the continent. Applications of Tetrahydrofuran include paints and adhesives and as a solvent in polymer resin industries. Inflation has impacted these downstream sectors as the end consumers have prioritized their necessities towards the food sector rather than the clothing and polymer industries.

Furthermore, China is the major exporter of Tetrahydrofuran and its feedstock butanediol. China's trade activities have unexpectedly declined compared to the previous two years. This occurred as internal issues like Covid Zero regulations and a property collapse reduced demand at home while growing recessionary threats caused abroad consumers to purchase fewer goods.

As per ChemAnalyst, the market prices of Tetrahydrofuran are anticipated to decline continuously as the demand for the Tetrahydrofuran may show southward momentum along with decreasing exporting quantity of the product from China. European buyers are showcasing wait-and-watch behavior in the hope that prices may continue declining.