Price trend

According to the Commodity Market Analysis System of SunSirs, from June 30th to July 4th, the average price of BDO in China remained at 8,700 RMB/ton, with a month on month increase of 6.72% and a year-on-year decrease of 3.32%. The domestic BDO market has been stagnant after rising. Restarting production capacity exceeds maintenance capacity, resulting in a significant increase in supply and weakened supply side support; However, the demand in downstream industries has decreased, and the supply is significantly greater than the demand, exacerbating the wait-and-see sentiment in the market.

Analysis review

On the supply side, although Junzheng equipment has not yet restarted and Wuheng Chemical Phase II has stopped for maintenance, the restart of 3D, Dongjing, Yongying and other equipment, as well as the increased production of Hualu's second line, have significantly increased the industry's capacity utilization rate to around 55%. The market supply of goods has increased significantly, and the favorable situation on the supply side has weakened. The supply of BDO is affected by favorable factors.

On the cost side, raw material calcium carbide: The domestic calcium carbide market has experienced a downward trend, with mainstream trade prices in the Wuhai area falling to 2,350 RMB/ton, and production enterprises are actively shipping. The domestic methanol market has fallen from a high level, and as of 10:00 am on July 4th, the reference price for domestic methanol in Taicang is between 2,465-2,470 RMB/ton. Raw materials such as calcium carbide and methanol are both showing a downward trend, and the cost of BDO is affected by unfavorable factors.

On the demand side, downstream industries such as PBAT and TPU have seen an increase in production, but PTMEG, PBT, and PU pulp have seen a decline in production, resulting in a reduction in overall consumption on the demand side. As a result, pressure on BDO supply and demand has begun to emerge. Downstream industries are still in a loss making state and are resistant to high priced raw materials. The demand side of BDO is affected by bearish factors.

Market outlook

With the restart of maintenance equipment in the BDO market, the supply of goods has increased again, and the support from the supply side has weakened. Downstream industries have slightly increased production, leading to an increase in raw material digestion. However, the increase in supply exceeds demand, and the pressure on supply and demand will continue to increase. SunSirs’ BDO analysts predict that the domestic BDO market will enter a stage of stagnation and consolidation.

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