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US Butanediol Market Remains Stagnant Amid Housing Slowdown and Feedstock Price Variations
US Butanediol Market Remains Stagnant Amid Housing Slowdown and Feedstock Price Variations

US Butanediol Market Remains Stagnant Amid Housing Slowdown and Feedstock Price Variations

  • 07-Sep-2023 2:20 PM
  • Journalist: Jung Hoon

Butanediol market dynamics in the US market did not show many variations in the domestic market as the housing index and the demand outlook for the product from the paints and coating sector remained under pressure. Following historically low mortgage rates and soaring home prices, the US housing market began to showdown. From the second quarter of 2023, the prices continue to slip most of the time, accompanied by the slow demand and varying production cost of Butanediol in the US market. This slowdown led to layoffs in finance companies, concerns of a housing recession among real estate economists, and the anticipation of a potential correction in home prices. Butanediol prices in the US market were observed at USD 1677 per MT, FOB Texas, at the end of August and early September.

However, an unexpected turn of events occurred as domestic values started to rise once again. The most recent Case-Shiller home price index reveals a consistent five-month upward trend in housing costs. Furthermore, the National Association of Realtors (NAR) reported that over half of US metropolitan areas experienced a rise in home values during the second quarter of 2023. However, despite these positive trends, the overall demand for paints and profit increases from Butanediol suppliers fell short of expectations.

Nevertheless, the swift increase in mortgage rates and a significant drop in home sales have raised concerns for many Butanediol manufacturers, leading them to prepare for potential challenges ahead. The US affordable housing construction landscape is poised for significant transformation in two years. According to analysts, developers anticipate a substantial shortage that could reverse the recent progress in addressing the challenging, affordable housing gap seen in numerous US cities.

Despite rising interest rates, there has been a notable reduction in the initiation of housing projects for the current year. Given that projects started in 2022 typically take 18-24 months to complete, construction companies are bracing for a severe supply shortage by mid-2025.

Another facet governing the price dynamics of Butanediol in the US market includes the price fluctuations in feedstock prices. Maleic Anhydride is the major source material for Butanediol production, and any variations in the prices of the same proportionally impact the production cost of Butanediol. Past weeks witnessed a continuous decline in the maleic anhydride prices owing to the suppressed demand, hence proportionally showcasing its impact on the Butanediol prices. Minor elements such as the occurrence of hurricanes in the States, Panama Canal congestion, strengthening US dollars, and tight labor market contributed their part in impacting the overall Butanediol prices in the US market. As per ChemAnalyst, Butanediol prices may pick up their pace slightly in upcoming quarters as the US government is paying attention to increasing the construction sector in the domestic market.

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