Moderate Demand and Low Propylene Cost Impact the Butyric Acid Prices in China

Butyric Acid has been getting cheaper in China since August 2022. Demand has significantly decreased due to the implementation of the zero covid strategies and an inadequate supply of power for production purposes. Additionally, due to the crude oil market's underperformance over the past few months, many upstream Butyric Acid processing companies have had to limit or decrease their production rates.

Downstream businesses that produce cosmetics and animal feedstock had to cut back on their manufacturing activities. Companies that produce Butyric Acid have not been able to get a steady supply of electricity because of the severe drought. The additional cases of COVID-19 resulted in a decrease in demand for this product, and Butyric Acid production became less profitable.

The reduction in production has not been sufficient to stabilize Butyric Acid prices till now because of the moderate demand. Consequently, material availability over the past two months has met overall demand.

Due to the lack of demand from end users, Butyric Acid prices are likely to continue falling in November 2022. For the purposes of production, more companies in the downstream industries are likely to show some interest in this product. It is anticipated that the price of propylene, the base material used to make Butyric Acid, will fall, which may also lower the price of this product.

From August to the second week of October 2022, sales of butyric Acid decreased further, but prices remained modest in the face of decreasing demand. As of November 11, 2022, the price of this product was about USD 1,500 per MT on FOB-Shanghai basis, and demand from animal feedstock and cosmetics companies was even lower at the beginning of the low season. Additionally, an increase in COVID-19 cases slowed trade movements. ChemAnalyst anticipates further price reductions for Butyric Acid through the year's end.

However, ChemAnalyst anticipates that demand for this product for downstream processing will rise in January 2023, resulting in an increase in the price of this product. The price of Butyric Acid is likely to rise in the event that COVID-19 restrictions are relaxed and the power supply is stabilized.