July China BDO Market Prices Retreat from Highs

July 31 News

According to the commodity market analysis system, the BDO market in China has declined. From July 1 to 31, the price of BDO fell from 8,735 CNY per ton to 8,400 CNY per ton, a decrease of 3.84% within the period, and a year-on-year decline of 5.92%.

At the beginning of the month, the Chinese BDO market experienced a price increase followed by stagnation. Restarted production capacity exceeded that undergoing maintenance, leading to a significant increase in supply and weakening support from the supply side. Meanwhile, demand from downstream industries declined, resulting in supply significantly exceeding demand and intensifying cautious sentiment among market participants.

In the early part of the month, supply remains ample. While demand from downstream industries has increased, supply still exceeds demand, intensifying the pressure on supply and demand. Market participants are in a wait-and-see mode, and spot trading is limited. The negotiations between supply and demand are ongoing, and the focus of the Chinese BDO market remains stable.

Mid-month, some facilities restarted, increasing the supply. However, the operation of major downstream industries declined, reducing the consumption of raw materials, and the supply-demand pressure increased, leading to a weak market atmosphere for BDO in China.

Near the end of the month, the BDO supply in China has increased. However, the operating rates of major downstream industries have declined, leading to a continued reduction in raw material consumption. The supply-demand contradiction has intensified, and traders are holding a mindset of selling off inventory, which drags the market focus continuously downward.

Supply side: Lanshan Tunhe's phases two and three facilities are shut down for maintenance, while Xinjiang Xinye's facility has restarted. Other facilities are operating stably, and the industry's supply volume continues to increase, with no favorable support from the supply end. The BDO supply is affected by negative factors.

Statistical summary of maintenance and operation status of some production enterprises:

Cost aspect: Raw material calcium carbide: The Chinese calcium carbide market is largely stable with minor fluctuations. Unstable market operations have led to a reduction in supply, but the recovery of demand in phases has accelerated the consumption of pending deliveries. Raw material methanol: The Chinese methanol market has shown some signs of recovery. As of 10:00 am on July 31, the reference price for methanol in Taicang, China, was 2,410 CNY/ton. The fluctuating and organizing of raw materials, calcium carbide and methanol, have mixed impacts on the cost aspect of BDO.

On the demand side, downstream industries such as PTMEG, GBL-NMP, and PBAT have experienced reduced loads, while industries like PBT and TPU have seen increased operations. However, overall demand-side operations have declined, leading to a continued reduction in raw material consumption and exacerbating the imbalance between supply and demand in the industry. Additionally, under the influence of traditional off-season effects, terminal demand has weakened. Under pressure from supply and demand, prices for some downstream industries, including THF, PBT, GBL-NMP, and spandex, have fallen, squeezing profit margins and intensifying downward pressure on raw material pricing. The demand side for BDO is leaning towards bearish factors.

Future Market Forecast: Supply continues to significantly exceed demand, exacerbating the imbalance between supply and demand. Downstream industries are experiencing losses and exerting strong downward pressure on raw material prices. The market lacks positive support. BDO analysts predict that the Chinese BDO market is likely to continue weakening.