For the Quarter Ending December 2024
North America
In Q4 2024, the Isobutane market in North America experienced a relatively stable trend, despite facing pricing pressures. In the first month of Q4, prices saw a slight decline driven by weak domestic demand and high inventory levels. The shift towards winter led to reduced demand in the refrigeration sector, a major consumer of Isobutane. Industrial activity showed some recovery, but it was not sufficient to boost demand for Isobutane.
Additionally, the U.S. chemical industry raised concerns about the potential impact of an extended dock workers' strike on the Gulf and East Coasts. Such a strike could disrupt exports and exacerbate supply surpluses. With production levels remaining moderate, ongoing supply chain challenges continued to affect both imports and exports, further dampening market sentiment.
On the supply side, Isobutane production operated at near capacity in North America. Export demand remained robust, especially due to constrained supplies in other regions. While logistical challenges, including rising freight costs, added some pressure on prices, the overall market stayed relatively balanced. Demand from the petrochemical sector, particularly for fuel production, was steady, but the weak refrigeration demand tempered overall market growth. Prices remained under pressure through the quarter, showing only modest fluctuations due to strong export activity and continued oversupply.
APAC
In Q4 2024, the Isobutane market in the APAC region experienced a mixed trend. In October, prices in China declined, continuing a downward trajectory due to weak demand and high inventory levels. The seasonal shift toward winter reduced demand from the refrigeration sector, a major consumer of Isobutane. Despite a marginal improvement in industrial activity, as indicated by a slight rise in China’s manufacturing PMI to 50.1, demand for Isobutane remained weak due to oversupply.
Supply-side conditions remained stable, with production levels in China operating near capacity. While there were improvements in global supply chains, including stabilization in raw material inventory and supplier delivery times, these factors did little to alleviate the oversupply in the Isobutane market.
By the end of Q4, Isobutane prices were further influenced by a surge in demand from the petrochemical sector, particularly for alkylation processes used in fuel production. Exports to India and other parts of Asia also rose, driven by seasonal demand and local supply constraints. However, the overall market remained challenged by high inventories and weak domestic consumption, keeping prices relatively stable for the quarter.
Europe
In Q4 2024, Isobutane prices in Europe were influenced by mixed supply and demand factors. The market saw a slight downward trend in start of the quarter, driven by weak demand from the refrigeration sector as the seasonal shift toward winter lowered consumption. At the same time, industrial activity remained subdued, with only slight improvements seen in manufacturing, which did not significantly impact the demand for Isobutane.
Supply-side conditions in Europe remained relatively stable, with Isobutane production levels meeting both domestic and export needs. While production continued at a steady pace, global supply constraints, particularly in major producing regions like the US and Asia, put upward pressure on prices.
The petrochemical sector saw strong demand, particularly from alkylation processes, which helped support the market. Additionally, European exports to Asia, driven by local supply shortages, showed a moderate increase. Despite these factors, overall demand in Europe remained weak, and prices experienced minimal fluctuations through the quarter, largely stabilized by strong export activities.
For the Quarter Ending September 2024
North America
Isobutane prices remained confined to a narrow range in Q3 2024, reflecting the influence of several interconnected factors. The U.S. economy displayed mixed resilience, maintaining momentum despite ongoing inflation concerns and geopolitical challenges.
Supply dynamics were influenced by consistent manufacturing output and shifting trade conditions. The Producer Price Index (PPI) for manufacturing edged down from 249.624 in Q2 to 248.383 in Q3, indicating modest cost reductions for producers. The economy benefited from inventory replenishment efforts, with GDP growth reaching 3.0% in Q2 and forecasted to rise 2.7% for the year.
Consumer and business investments, supported by the CHIPS Act and other policies, sustained demand, while inflation eased below 3.0% by July. However, risks to supply chains emerged from geopolitical tensions in Ukraine and the Middle East and the possibility of new trade tariffs. Although the Fed’s expected rate cuts aim to maintain economic growth, uncertainties in labor markets and trade policy could impact supply conditions through 2025.
Asia
In Q3 2024, isobutane prices in China followed a downward trend, with prices declining by2% in September from USD 1790/MT in August. The price decline was driven by weakened demand from both domestic and international markets, particularly in key sectors like refrigerants, where seasonal slowdown set in due to the arrival of winter. Additionally, demand from plastic manufacturing softened as peak procurement tapered off. Despite these challenges, China’s manufacturing sector showed slight improvement, with the PMI rising to 49.8% in September, suggesting a modest rebound in industrial activity. Supply levels remained robust throughout the quarter, with sufficient inventories to meet domestic and export needs, ensuring uninterrupted availability. Broader economic indicators, including a slowdown in industrial output and a decline in oil refinery and steel production, further dampened chemical demand. Although automotive production grew by 9% month-on-month, supported by NEV subsidies, it was insufficient to counterbalance the overall bearish market sentiment. Despite some hopes for demand recovery during China’s peak consumption seasons, such as "Golden September and Silver October," the quarter concluded with low demand fundamentals, stable supply, and downward pressure on isobutane prices.
Europe
In the third quarter of 2024, product prices in Europe exhibited limited fluctuations due to economic uncertainties linked to the ongoing West Asia conflict and slow growth in Europe and the U.S. Freight markets faced multiple challenges, with carriers like MSC and CMA CGM pushing FAK rates to $6,500 per container because of tight space and added surcharges. Red Sea disruptions and delays at Singapore ports further strained logistics. Air freight rates from Northeast Asia to Europe surged by 40% year-over-year, driven by a surge in e-commerce and semiconductor demand. Despite expanded capacity, supply chain imbalances remained unresolved. Geopolitical tensions and upcoming seasonal demand suggest continued volatility into Q4 2024. Meanwhile, Germany’s industrial sector continued to struggle, with weak production, high energy prices, and falling export demand, affecting the broader eurozone economy. Additionally, outlook for Q4 2024 seems dull too, as the geopolitical situation of the world is still disbalanced and in a threatening situation
