Raffinate Prices are Dropping in China, While Line-Up in the USA Market

Despite the rise in demand from the downstream value chain industry, prices of Raffinate have inched lower in the Chinese market towards the end of Q2 of 2023. The decline in the prices was mainly attributed to the weak production cost along with oversupply in the market. At the same time, prices of Raffinate have showcased upward stagnancy in the USA market supported by stable demand and supply dynamics.

In the Chinese market, Raffinate prices have decreased during April 2023 on account of low-cost pressure from the feedstock Naphtha; meanwhile, upstream crude oil has demonstrated a bullish trend throughout the month. Although, demand for Raffinate from the downstream Methyl tert-Butyl Ether sector has increased as the consumption from the end-user gasoline industry has rebounded after the easing of Covid-restriction in the domestic market. In the meantime, demand from other sectors like Methyl Ethyl Ketone and Secondary Butyl Alcohol has remained moderate from both domestic and overseas markets. In addition, Raffinate prices declined in China as the supply side was more dominant and adequate inventories were available to meet the overall demand. Furthermore, in order to stimulate sales, manufacturers have cut their profit margins which further supported the Raffinate prices to follow the downtrend in the domestic market. Thus, as a result, prices of Raffinate FOB Qingdao were settled at USD 830/MT with a month-on-month decrement of USD 30/MT.

On the other side, Raffinate prices have shown stagnancy with a marginal increment of 0.7% in the USA market, backed by the moderate demand from the downstream Methyl tert-Butyl Ether, Methyl Ethyl Ketone, and other sectors. Market players reported that the enthusiasm of end-user firms to enter the market is not high, and market transactions are mostly based on small orders. On the raw material front, Naphtha prices have remained constant, which resulted in the soft production cost of Raffinate in the domestic market, while the adequate material available in the US ports via the steady inflows of Asian imports has led to the dominant supply market. Hence, prices of Raffinate DDP Texas were offered at USD 765/MT during the same time frame.

As per ChemAnalyst's anticipation, Raffinate prices will continue to decline in the Chinese market in the upcoming month due to weak feedstock Naphtha prices. In addition, international crude oil prices may fall broadly after the Labour Day holidays. Demand from the downstream Methyl tert- Butyl Ether and allied sectors is expected to tepid, and multiple Methyl tert- Butyl Ether industries may undergo maintenance. Although, in the USA market, Raffinate prices are projected to increase on account of growing demand from the downstream industry.