Prices of Butyric Acid Witness Stability in France as Procurement Activities Decline

Prices of Butyric Acid have remained stable across the French market since the beginning of the year 2024 despite prices of feedstock Propylene witnessing a surge of approximately 10% across Europe. The prime reason for stability in the prices of Butyric Acid in France is largely attributed to maintenance of an adequate gap between demand and supply which prevented the prices of the product from fluctuating.

On the supply side, conditions remained challenging with shipments of feedstock Propylene being largely reduced and delayed due to unplanned shutdowns of Propylene plants across the United States and the crisis at Red Sea worsening in January 2024, which consequently caused freight charges from US to Europe increase by 80%.

On the demand side, the post festive dullness continued to prevail across Europe because of which production rates of Butyric Acid remained largely moderate. The demand of Butyric Acid from the downstream FMCG and chemical industry was mostly moderate. With demand of Butyric Acid being largely stable from the downstream FMCG industries across Europe, supplies were cautious in restocking activities.  The only stable demand for Butyric Acid originated from the pharmaceutical industries after witnessing a healthy demand in December 2023 as indicated by major flavoring companies reporting healthy profits in operating revenues in the last quarter of 2023.

In terms of manufacturing activities, the start of the new year saw the French manufacturing sector experiencing severe pressure since the country's production, new order, and employment indicators were all in severe contraction zone. Depletion of inventory and a decrease in purchasing activity were two further signs of retrenchment as businesses adapted to the weak demand environment. Notably, following the interruption in the Red Sea, suppliers' delivery times increased to the highest level in almost a year.  Although costs kept declining, companies' forecasts for the upcoming year remained gloomy. Less strain on capabilities combined with a steep decline in outstanding business volumes caused the present backlog depletion sequence to last a full year, which in turn caused a decline in manufacturing employment levels in France.

With the manufacturing sector remaining in contraction, moderate supplies of Butyric Acid were recorded to be in circulation amidst the largely stable demand across Eurozone which prompted prices of the product from fluctuating.

Overall prices of Butyric Acid are expected to depreciate in February 2024 as the French Butyric Acid market is anticipated to be driven by the low demand from the downstream FMCG industries.