SunSirs: BDO Market Was Consolidating and Weakened

Price trend

According to the SunSirs’Commodity Market Analysis System, the average domestic BDO price fell from 8,400 RMB/ton to 8,371 RMB/ton from August 4th to 8th, a 0.34% decrease over the period, a 4.17% month-over-month drop, and a 4.87% year-over-year drop. While supply decreased, while major downstream industries saw slightly increased production, consuming more raw materials, supply still significantly outstripped demand. Holders expressed low confidence in the market outlook and offered discounts on actual orders, leading to a volatile downward trend in the domestic BDO market.

Analysis review

On the supply side, Shaanxi Heimao’s unit was shut down for maintenance, and Xinjiang Xinye's unit was temporarily shut down due to boiler problems. Other units operated stably, leading to another reduction in industry supply and slightly increased supply-side support. BDO supply was negative for the market.

Statistics on the operation of equipment of some production enterprises:

On the cost side, domestic calcium carbide prices bottomed out and rebounded, with the price increase primarily driven by shifts in the market supply and demand environment. With prices remaining low, production companies were facing deepening losses. Furthermore, recent increases in lignite and electricity costs in Ningxia had led to increased plant shutdowns and reduced operating rates for some companies. Regarding methanol, the domestic methanol market was weakening and consolidating. As of 3:00 PM on August 8, the reference price for methanol in Taicang was 2,380 RMB/ton. The weakening of calcium carbide and methanol provided negative factors for the market.

On the demand side, downstream production of PTMEG and PU slurry increased, while production of PBT and PBAT declined. Loads in other industries remained stable, leading to an overall increase in demand for raw materials. However, supply significantly outstripped demand, maintaining supply-demand pressure. Meanwhile, market conditions in many downstream industries declined, making them less receptive to high raw material prices and leading to severe price pressure from entrants. This BDO demand provided negative factor for the market.

Market outlook

BDO market supply was increasing, while demand was slightly decreasing, maintaining a persistent supply-demand imbalance. Furthermore, many downstream industries were experiencing weak and volatile trading, putting pressure on costs and creating significant bargaining power over raw material prices. BDO analysts of SunSirs predict that the domestic BDO market will primarily be weakly consolidated.

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