How will the trend of n-butanol in 2026 be, after the "high first, then low" pattern in 2025 in China?

January 4th News

I. Review of the 2025 n-Butanol Price Trend

From the data monitoring system, it can be seen that throughout 2025, the n-butanol market in Shandong, China, experienced an overall fluctuating downward trend. On January 1, 2025, the price of n-butanol in the Shandong region was 7,116 CNY/ton, and on December 31, 2025, the price was 5,633 CNY/ton, with a year-on-year price decrease of 20.84%.

The data monitoring chart shows that from January to December 2025, the n-butanol market in China experienced a trend of "high at first, then low, with a weak correction at the end of the year."

The n-butanol market from January to June 2025 has been hovering and declining for half a year, with prices dropping by nearly 9%.

In the early part of the year, the n-butanol market experienced volatile trading, with prices hovering around 7,100 to 7,200 CNY per ton. Starting in March, the n-butanol market began a sharp downward trend. By May and June, the market showed a slight recovery, but the rebound lacked momentum. In the first half of 2025, n-butanol prices fell by 8.9%.

From July to December 2025, the decline in n-butanol prices in China intensified, with the lowest prices approaching 5,000 CNY/ton.

In the second half of 2025, the butanol market trend in China continued to decline. On August 8th, after the butanol price fell below the 6,000 CNY/ton mark, it experienced a small rebound, but the support was insufficient, and the trend declined again. The "Golden September and Silver October" did not provide a boost to the market, and the downward channel opened. On November 20th, butanol prices hit the lowest point of the year, approaching the 5,000 CNY/ton mark, with a reference price of 5,066 CNY/ton, representing a decrease of over 21% for the year. Subsequently, the market trend saw a small rebound, but the increase was limited, with the annual price range being 5,150-5,850 CNY/ton.

II. Analysis of Factors Influencing the 2025 N-Butanol Market Outlook

• Raw Materials and Cost Factors: The price fluctuation of propylene, the key raw material, is the core driver. In 2025, the market price of propylene has been hovering around 7,100–5,900 CNY per ton. From year-end to early this year, the propylene market experienced a significant decline; in October and November, the downward trend in propylene prices accelerated, directly weakening cost support for n-butanol and pushing market prices down to their lowest level of the year, with insufficient effective market support.

•Supply and Demand: Throughout 2025, the n-butanol market in China generally showed a "supply exceeds demand" trend. During the year, the overall production of n-butanol remained at a high level, with ample supply. In the first half of the year, the demand from downstream industries such as coatings and plasticizers was in its peak season, which provided a reasonable level of support for the supply, and the overall price decrease of n-butanol was limited. Entering the second half of the year, especially in the fourth quarter, the downstream demand for n-butanol entered a low season. Downstream enterprises were focused on digesting their existing inventory, and their purchasing enthusiasm waned. New orders were made cautiously, and inquiries concentrated on lower prices. The support from the demand side gradually weakened, leading to a significant drop in market prices.

• Policy and Process: The "Carbon Peak Implementation Plan for the Petrochemical and Chemical Industry" imposes constraints on coal-based facilities, increasing carbon costs. Some high-carbon capacities are forced to reduce their load, while green process facilities maintain stable supply due to policy advantages, affecting the market supply and demand structure.

III. Outlook and Forecast for the 2026 n-Butanol Industry

(1) Capacity Forecast: Structural expansion continues, and concentration further increases.

From 2018 to 2023, China's n-butanol capacity maintained steady growth. In 2024, the release of new n-butanol capacity accelerated, and in 2025, there was further new capacity released. In 2025, China's n-butanol industry exhibited parallel characteristics of "structural expansion + elimination of inefficient capacity," with a total capacity of approximately 4,030,000 tons per year, an increase of 10.10% compared to 2024.

In terms of regional distribution, by 2025, the East China region will remain the core area for production capacity, with Shandong and Jiangsu provinces accounting for over 65% of the capacity due to their integrated development and port advantages; the South China and western regions of China will have relatively smaller shares of production capacity.

(2) Supply and Demand Outlook: Demand Growth Outpaces Supply, Structural Shortfall Emerges

• Supply Side: In 2026, the overall supply of n-butanol in China is expected to increase. However, due to stricter environmental regulations, some small and medium-sized capacities may face temporary production limits, affecting local supply in the short term. Additionally, with the pressure of carbon costs and the impact on coal-based facility utilization rates, it is estimated that the capacity utilization rate in 2026 will be around 86%, resulting in a moderate and controlled growth in overall supply.

• Demand Side: In 2026, demand for n-butanol is expected to increase further. In traditional sectors, water-based coatings and plasticizers will continue to provide stable demand support. Meanwhile, demand in emerging sectors will experience explosive growth. Specifically, the demand for n-butanol used in electric vehicle battery materials and biodegradable plastics will grow at an increasingly rapid pace. Moreover, the demand for electronic-grade n-butanol used in semiconductors is also gradually picking up. These emerging sectors will become the key drivers of n-butanol demand growth in 2026. Overall, in 2026, the growth rate of demand will outpace the growth rate of supply, causing the industry to shift from a state of “supply-demand balance” to a state of “structurally tight balance.” During the peak demand seasons in the second and third quarters, localized supply shortages may occur.

(3) Production Forecast: Production will increase along with supply and demand.

From the perspective of continuous expansion of supply capacity and the growth in demand from emerging sectors, it is expected that China's n-butanol production will see a slight increase in 2026. Over the past few years, China's overall n-butanol production has fluctuated within a certain range. In 2024, the concentrated release of n-butanol capacity boosted overall production. In 2025, new capacity continued to be added to the market, and it is estimated that the n-butanol production in 2025 will be around 2,970,000 tons. It is projected that in 2026, with the increase in capacity and the push from demand, n-butanol production is likely to exceed 3,300,000 tons.

(4) Export Outlook: The export market is expected to expand again.

In recent years, China's n-butanol export volume has always been very small, not exceeding 30,000 tons, and it began to decline since 2022. In 2023, it was only 0.37 million tons, a decrease of 83.33% year-on-year. In 2024, the n-butanol export volume increased, but it decreased in 2025. From January to October, the n-butanol export volume was 11,700 tons. The decline in data indicates an overall loose demand. Currently, the demand in markets such as Vietnam, India, and Turkey in Southeast Asia and Central and Eastern Europe is strong. Therefore, in 2026, China's n-butanol exports are expected to increase again.

(5) Price Trend Forecast: Initially Down, Then Up, with the Central Tendency Shifting Higher

Combining data with industry fundamentals, it is expected that the price of n-butanol in 2026 will show a trend of "bottoming out in the first quarter, rising from the second quarter, and operating at high levels in the second half of the year." The annual price center will be 5%-8% higher than in 2025, with the core operating range being 5,400-6,200 CNY/ton.

•First Quarter: Continuing the weak trend from the end of 2025, downstream demand remains in the off-season, resulting in light market trading activity. Prices have bottomed out in the range of 5,400 to 5,600 CNY per ton, primarily weighed down by insufficient pre-Spring Festival stocking demand and abundant supply.

•Q2: As downstream industries such as coatings and plastics enter their peak construction season, coupled with a surge in demand for new energy materials, demand-side support is strengthening. Meanwhile, propylene prices are expected to stabilize and rebound, driving n-butanol prices above 5,800 CNY/ton and moving toward the 6,000-CNY/ton range.

III. Summary

In 2025, the n-butanol industry in China operated with fluctuations under the influence of capacity optimization, demand upgrading, and policy guidance, with prices showing a weak downward trend and periodic adjustments due to supply and demand and raw material volatility. In 2026, the industry will enter a "high-quality growth" phase, with increased capacity concentration, upgraded demand structure, and green transformation becoming the core focus. The tight balance between supply and demand will push the price center upward, with emerging fields and export markets becoming key growth drivers. Companies need to focus on upgrading green processes, developing high-end products, and optimizing regional layouts to cope with market fluctuations and policy changes, and to seize the development opportunities brought by the industry's transformation.