Downstream demand in general BDO after the market or difficult to have a large upturn

After a small price increase in the 1,4-butanediol (BDO) market on August 24, BDO prices in the Chinese market have been fluctuating around RMB 9,900 to 10,200 (per ton price) as of September 5, under the influence of multiple factors of most enterprises' maintenance, negative operation and light downstream demand.

Costs fell slightly

According to the data, as of Sept. 5, the cost price of calcium carbide BDO was 10,600 yuan, and the production profit was -512 yuan based on the market price of 10,100 yuan on that day.

On September 5, the mainstream price of raw material calcium carbide market in Shaanxi is 3730 yuan, down 50 yuan from last week's 3780 yuan; the mainstream price of methanol market in southern Shaanxi is 2400 yuan, up 30 yuan from last week's 2370 yuan. This means that the cost of BDO fell slightly.

"Recently, the price of calcium carbide is mainly stable, and there are still price reductions in some areas. Shaanxi region is affected by the epidemic, raw materials and product shipments are hampered, the number of shutdown and maintenance enterprises increased, some enterprises in order to ship, the price cut by 50 yuan. The price of calcium carbide in Henan and Shanxi continued to fall, and some enterprises also chose to cut 50 yuan. Gansu calcium carbide market is still depressed, continued downward trend." China Tourmaline Industry Association Deputy Secretary General Jiang Shunping said.

Jiang Shunping analysis, the current market continues to be sluggish, calcium carbide enterprises to stop production or reduce the negative run will be more and more, the overall start rate will be further down. However, with the gradual digestion of calcium carbide inventory and downstream part of the polyvinyl chloride plant to resume production and other changes in the situation, is expected to improve the supply and demand relationship, calcium carbide prices are expected to be further upward.

As BDO prices continue to decline, the industry is entering a loss-making situation. The average start-up rate of the domestic BDO industry in August was 64.7%, down 13.4% from the start-up rate in July. The industry start-up rate will be further reduced as the enterprises will continue to overhaul their plants and change agents.
The industry start-up rate will be further reduced.

General demand follow-up

As the downstream spandex and other industries continue to demand flat trend, BDO prices may not rise greatly.

"At present, the main end product spandex start rate dropped to about 54%. Recent epidemic in Yiwu, Wenzhou, Suzhou and other places repeatedly affect the terminal demand, the start-up to maintain a low level, resulting in spandex factories in the short term is still to digest inventory." Polytetramethylene ether glycol plants more device overhaul or reduce negative production, industry start-up rate dropped to below 50%, the amount of digestion of raw materials BDO reduced.

As the market price stabilizes, downstream manufacturers appear willing to stock up in advance, while BDO plants are also not willing to make further concessions.

At present, 1,4-Butanediol BDO built capacity is 2.175 million tons, but the planned capacity has exceeded 20 million tons. In the face of the blowout capacity, BDO producers are quite worried about it. Some industry players are also expected to be optimistic, the next demand explosion point comes from new energy vehicles, lithium battery solvent NMP will pull the BDO demand over 10 million tons.