Demand-Supply Imbalance of 1,4-Butanediol will Again Soar the Prices at North-East Asian Market

After observing a persistent downtrend in the Asia Pacific market, the 1,4-Butanediol (BDO) market starts observing some gains since the third week of  January 2022 amidst the supply concerns in the forthcoming period. The North-East Asian region is largely impacted due to the lower inventories and production margins led to tightness in the availability of BDO.

In the fourth quarter of 2021, the offers for BDO constantly declined amidst the ease in the raw materials after the Chinese authorities curbed the power rationing. The supply outlook is healthy against the inadequate demand from the downstream sectors. Whereas, due to lower demand numerous facilities were reluctant to increase the operational rates as it curtailed the production margin by a significant gap. Therefore, due to the bearish mentality, the running inventories level remained low since December 2021.

In January, the market sentiment catch up some pace after the demand outlook witnessed a significant improvement ahead of the upcoming spring festival holidays in China. In response, several downstream players rushed to procure the volumes for BDO, the supply-demand gap started to widen in mid-January. A major BDO market player in China informed that due to the upcoming Lunar New Year holidays, the goods and logistics transportation provider stopped responding to new inquiries post 20^th January and the international express stopped after 26^th January. In response, several BDO producers and downstream players in the Northeast Asian region such as Asahi Kasei, Taxilong, Sun Chemical soared the printing material prices by (20-30)%. Whereas, two major suppliers in Asia,  Lanshan Tunhe announced to only respond to the contractual inquiries amidst the low running inventories in mid-January, and Markor Chemicals temporarily shut down the productions in all three BDO facilities of the third phase in sequence to replace the catalyst. Therefore the total operating rate drops to 60% in all other BDO facilities the management of Markor Chemical is also responded to contractual inquiries on a monthly basis besides no spot sales.

As per ChemAnalyst, due to the current tightness of BDO in the Asia Pacific market and the upcoming Winter Olympics in China. The production level is likely to remain suppressed in February. Therefore, due to the fewer spot market activities against the ample demand and prevailing supply glut. It is anticipated that the BDO offers were likely to witness exceptional gains in the offered quotations in the Asia Pacific region.