Japanese Market Sees n-Butanol and Iso-butanol Prices Surge Amid Supply Constraints

Prices of n-butanol and Iso-Butanol across the Japanese market were recorded to have increased by approximately 6% during February 2024 due to increasing prices of feedstock Propylene across the European market which witnessed an incline of more than 18% during the same time, thereby leading to expensive imports into the Japanese market. Presently the Japanese market of Iso-Butanol and n-butanol continues to be driven by the increasing prices of feedstock and the present disruptions  at the Red Sea, which pushed up freight charges by more than 118% above the “threshold charges”

On the supply side, challenging conditions as strikes carried out by the German Union called a near-nationwide public transport strike for the second time in February 2024 which led to an increment in transportation costs. Moreover, a force major at OQ Chemicals at the Oberhausen site further exacerbated the supplies of n-butanol and Iso-butanol entering Japan. At the Oberhausen facility of OQ Chemicals, a significant disruption in operations happened on February 27 at the synthesis gas unit of the raw material supplier. The site partner provides OQ Chemicals with technical gases, such as synthesis gas, as a raw material for processing to manufacture Iso-Butanol and n-Butanol. Moreover, price hikes for Iso-Butanol and n-Butanol were also announced by leading oxo-alcohol manufacturers such as OQ Chemicals announcing a price hike of USD 110/MT for the Asia-Pacific market and Eastman announcing a price hike of USD 110/MT for the North and South American market.

In terms of demand, demand for Iso-Butanol and n-Butanol from the construction sector of Japan remained largely subdued as data from the Statistics Bureau of Japan revealed a decline of approximately 8% in construction starts in January 2024. Furthermore, the number of orders for public works also fell by 33% in January 2023 further worsening the demand conditions of n-butanol and Iso-butanol. Despite house prices being on the rise due to improved demand for rental office spaces as the labor crisis in Japan worsens, the increased high prices are generally driven by increasing input costs. The underperformance of the construction sector is seen as major projects such delayed completion of the pavillions for the World Expo 2025 in Osaka which is delayed until October of this year due to increased prices of construction material, which also includes n-Butanol and Iso-Butanol.

Overall, prices of Iso-Butanol and n-Butanol are expected to increase mainly driven by existing challenges in the supply chain conditions and increasing prices of feedstock Propylene.