Supply Constraints Inflate the Isobutylene Prices in the USA and Germany
- 16-Sep-2022 3:22 PM
- Journalist: Henry Locke
Since the beginning of September, prices of Isobutylene have continued to rise in the USA and German markets, backed by supply chain disruption. Although, demand from the downstream sectors has remained lacklustre across the regional market.
According to the data, German Isobutylene prices have risen by 3.5%, supported by the high production cost amid mounting energy prices. In contrast, speculation of inflation across Europe has dampened the demand from the downstream derivative, i.e., Polyisobutylene industries. According to the ifo, the Business Climate index fell from 88.7 points to 88.5 points in August. Further, Germany imported Isobutylene from other European regions like the Netherlands, Belgium, and the UK by road, and the ongoing AdBlue shortage, along with road freight costs, has been affecting its shipment.
At the same time, due to labour unrest and strike, the persistent port congestion at important ports like Hamburg, Bremerhaven, and Zeebrugge has resulted in Supply chain disruption. Also, container ships are currently queuing in front of all North Sea ports, waiting to unload and clear customs. According to Germany's Kiel Institute for Economic Research (IFW) calculations, about 2% of the world's containerized cargo is stuck in ports along the North Sea coast. Hence, as a result, Isobutylene FD Hamburg prices were offered at USD 1176/MT during September.
Meanwhile, in the USA, similar market trends have been observed. The escalating container ship congestion in the USA is exacerbating supply activities. The vessels accumulated in the West Coast port are shifted to the East coast, creating pressure in East ports. Additionally, the continuous rise in inflation and the high freight rates prompted traders to revise their price quotations further. Moreover, the inland supply is affected by the delay in destocking the containers in the port; consequently, the negotiations between the railroad carriers and railroad unions resulted in delays in rail and truck transport for 12-30 days. Thus, prices of Isobutylene FD Texas were assessed at USD 1166/MT during the same time frame.
According to ChemAnalyst estimation, Isobutylene prices in the USA and Germany will continue to rise in the upcoming months. The current situation in the USA and European region is not likely to improve until supply and logistical problems are resolved; hence increment in the market value of Isobutylene might be observed."