SunSirs: BDO Market Continued to Weaken

Price trend

According to the SunSirs commodity market analysis system, domestic BDO prices fell to 7,522 RMB/ton from September 19th to 26th, a 0.27% decrease over the period, a 1.20% month-over-month decline, and a 0.88% year-over-year increase. Some previously reduced-load facilities had ramped up, and new capacity was producing high-quality products, increasing supply. This led to cautious bearish sentiment and price negotiations among industry players. The industry's long-term losses led suppliers to maintain a cautious market stance. Negotiations between supply and demand had led to a stalemate in the market.

Analysis review

On the supply side, while Wuheng Chemical's first phase of maintenance continued, previously reduced-load units at Heimao, Yanchang, and Hengli had ramped up, increasing supply to the industry. Furthermore, the commissioning of new production capacity at Xinjiang Shuguang Lvhua, which was producing high-quality products, had reinforced industry participants' cautious bearish outlook. The supply side of BDO may provide positive factors for the market.

Statistics on the operation of equipment of some production enterprises:

On the cost side, regarding raw material calcium carbide: The domestic market price for calcium carbide had seen a slight increase, with manufacturers experiencing smooth shipments and limited supply. Market supply recently recovered, with units that were previously under maintenance gradually returning to service, and production restrictions in Inner Mongolia somewhat resuming. Regarding raw material methanol: The domestic methanol market remained weak. As of 10:00 AM on September 26th, the reference price of methanol in Taicang was 2,250 RMB/ton. While raw material calcium carbide prices had risen, methanol prices had weakened, resulting in mixed impacts on BDO costs.

On the demand side, downstream suppliers continued to follow up on demand contracts or deplete inventory before the National Day holiday. Most downstream industries were experiencing profit losses, resisting high raw material prices, and showing little interest in spot purchases. The BDO demand provided negative factor for the market.

Market outlook

With the National Day holiday approaching, downstream stocking had largely concluded, resulting in few actual trades. The restart of previously overhauled equipment was increasing BDO supply. Downstream PTMEG production was ramping up, boosting raw material consumption. Both supply and demand in the BDO market were increasing, and negotiations were ongoing. BDO analysts of SunSirs predict that market volatility will be limited.

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