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Slow Downstream Demand Slashes European Butanediol Prices

Slow Downstream Demand Slashes European Butanediol Prices

Slow Downstream Demand Slashes European Butanediol Prices

  • 11-Oct-2022 5:00 PM
  • Journalist: Gabreilla Figueroa

Europe: In the European market, price dynamics of Butanediol witnessed a drop on the back of declining demand from end-use businesses. Feedstock Maleic Anhydride prices also remained on the lower edge as crude oil prices remained low in the regional market for the past few weeks. The German market price of Butanediol is USD 4500 per MT, Ex-Karlsruhe, towards the end of the first week of October 2022. 

The major threat to Europe is the ban on the export of natural gas from Russia. The suspected damage of pipelines carrying Russian natural gas to Europe intensifies already-heated global competition for power-station fuel shipments. The currently retired Nord Stream pipeline system was damaged, with Germany suspecting interference. It came as Russia threatened to cut off natural gas to Europe via a significant pipeline through Ukraine, escalating the conflict between Moscow and Western Europe. This action has resulted in lower production of spandex and other polymer textiles in the German market, proportionally slowing down the demand for Butanediol. Significantly, due to lower demand, many producers hesitated to raise their operational rates because it would reduce production margins.

According to market participants and major traders, there is a rush to book cargoes to transport more American gas to requiring European nations, pushing shipping rates to near-record highs. However, prices of Butanediol continued to follow the southward momentum due to less demand from end users. Before the Ukraine war, Europe received most of the gas from Russia. In recent data, a drop in Russian natural gas imports to the European market occurred, measuring up to 9%. It is understandable how the freight charges will influence the feed transaction from a major exporting country, China.

As per ChemAnalyst, the prices of Butanediol are anticipated to follow the stagnancy in the upcoming weeks as the European market will not be showing much momentum. China is a major producer of Butanediol and is on a week's holiday. Consequently, European manufacturers will have to use piled-up products to cater to domestic demand.

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