SunSirs: The BDO Market is Operating at a Stalemate

Price trend

According to the Commodity Market Analysis System of SunSirs, from July 7th to 11th, the average price of BDO in China has remained at 8,735 RMB/ton, with a month on month increase of 6.72% and a year-on-year decrease of 3.32%. At present, the supply is still abundant. The demand in downstream industries has increased, but the supply is still higher than the demand, and the pressure of supply and demand has intensified. Industry players have a strong wait-and-see attitude, and spot trading is limited. The supply-demand negotiation game has resulted in a relatively stable focus in the domestic BDO market.   

Analysis of influencing factors

On the supply side, the Junzheng plant in Inner Mongolia has not yet restarted, while the second phase of Wuheng Chemical has been shut down for maintenance since July 2nd, and there have been no changes in the operation of other plants. The industry supply has slightly decreased compared to the previous period, but it is still relatively abundant, and the overall support on the supply side is average. The favorable factors for BDO supply are gradually weakening.

On the cost side, raw material calcium carbide: The domestic calcium carbide market first fell and then stabilized. Due to the impact of PVC maintenance and some BDO maintenance in Shanxi, Qinghai, and Heilongjiang regions, demand weakened, and the accumulation of inventory in production enterprises accelerated the decline in calcium carbide prices. The domestic methanol market is consolidating weakly. As of 3:00 pm on July 11th, the reference price for domestic methanol in Taicang was 2,370 RMB/ton. Raw materials such as calcium carbide and methanol are both showing a downward trend, and the cost of BDO is unfavorable factor.

On the demand side, the downstream PTMEG, GBL-NMP, and TPU industries have seen an increase in production, leading to an increase in raw material digestion. However, due to the sluggish demand from end-users, downstream industries such as THF, PBT, GBL, NMP, TPU, and PU pulp have seen a decline in market conditions, resulting in a compression of profit margins. As a result, their ability to accept high prices for raw materials is relatively weak. The demand side of BDO is bearish factor.

Future outlook:

The supply of BDO in China is expected to increase in the near future. However, the overall production of downstream industries has declined, resulting in a reduction in the amount of raw material digestion and intensified supply and demand pressure. SunSirs’ BDO analyst predicts that the domestic BDO market has limited volatility.

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