SunSirs: Domestic BDO Market Continued to Decline in August

Price trend

According to the SunSirs commodity market analysis system, the domestic BDO market declined. From August 1 to 29, BDO prices fell from 8,400 RMB/ton to 7,571 RMB/ton, a 9.86% drop over the period and a 7.34% year-on-year decline.

Analysis review

At the beginning of the month, domestic BDO prices fell significantly, reducing supply. Meanwhile, operating rates in key downstream industries declined, reducing raw material consumption and maintaining a supply-demand imbalance. Holders actively offered discounts to sell, causing the market to fluctuate downward.

In early August, supply decreased, while major downstream industries saw a slight increase in production, leading to an increase in raw material consumption. However, supply still significantly outstripped demand. Holders lacked confidence in the market outlook, leading to price concessions and negotiations on actual orders, resulting in a volatile downward trend in the domestic BDO market.

In mid-August, supply increased, while production in key downstream industries declined, reducing demand for raw materials. This intensified the supply and demand for BDO, leading to a continued bearish outlook among industry players. Holders offered discounts on their orders, leading to a continued decline in the domestic BDO market.

As the month drew to a close, with the transition between the old and new cycles, a wait-and-see mood prevailed in the market, with contract orders trading heavily, while spot trading was rare. However, the supply-demand imbalance persisted, leading to cautious bearish sentiment among traders, with holders arguing at the lower end of the market, and the market's focus fluctuating weakly.

On the supply side: Lanshan Tunhe Phase II and III units had restarted, while other units were operating relatively stably, increasing market supply. Downstream industry load remained generally stable, with no significant increase in raw material consumption. The BDO industry remained under pressure on both supply and demand, negatively impacting procurement and sales sentiment. The BDO supply side was being negatively impacted by these factors.

Statistics on maintenance operations at some production companies:

On the cost side, raw material calcium carbide: Manufacturers were experiencing smooth shipments. Downstream maintenance efforts were gradually resuming, resulting in a decrease in calcium carbide export sales and a shift in market inventory to downstream suppliers. Raw material methanol: The domestic methanol market remained weak. As of 10:00 AM on August 29th, the reference price of domestic methanol in Taicang was 2,230 RMB/ton. Raw material calcium carbide and methanol prices were fluctuating, and the impact on BDO costs was mixed.

On the demand side, with the arrival of the traditional peak demand season of September and October, downstream operations are expected to increase. For example, major downstream industries, such as PTMEG, PBT, PBAT, and GBL-NMP, will see a gradual restart of facilities that were undergoing maintenance in late August and early September, increasing raw material consumption. Furthermore, the price of raw material BDO has fallen to a low level, easing cost pressures. This has increased downstream industries' enthusiasm for stockpiling or purchasing, somewhat easing BDO factory shipment pressures. The supply side of BDO provided negative factors for the market.

Market outlook

As of August 29, BDO factories faced limited shipment pressure, while industry losses were increasing. Suppliers were actively stabilizing the market. Downstream industries ere purchasing in response to urgent needs, and holders were concerned about losses from month-end settlements, weakening their willingness to offer discounts. Supply and demand negotiations were intensifying, but market fluctuations were limited, with both supply and demand increasing. BDO analysts of SunSirs predict that the domestic BDO market will primarily consolidate at a low level.

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