Weak Downstream Demand Causes Butyraldehyde Prices to Decline in Europe
Weak Downstream Demand Causes Butyraldehyde Prices to Decline in Europe

Weak Downstream Demand Causes Butyraldehyde Prices to Decline in Europe

  • 20-Feb-2023 3:24 PM
  • Journalist: Nicholas Seifield

Since the beginning of January 2023, European Butyraldehyde prices have been on the lower side due to sufficient inventories and declining downstream demand. In terms of domestic production, operating rates are under check due to weak consumption of Butyraldehyde from the downstream industries. Despite this, feedstock Propylene prices witnessed an uptrend throughout January, but it does not offer much cost pressure on the downstream Butyraldehyde prices.

Furthermore, Natural Gas prices have tumbled to their lowest level due to the abundance of availability in the European market. According to Gas Infrastructure Europe, Natural Gas stores across the European Union (EU) were 65% full in January. In addition, traders reported that the Natural gas price plunge would further reduce Europe's risk of recession.

On the other side, the orders for Butyraladehyde from the end-user paints and coating and other competitive industries are declining, while the inventories remain sufficient to meet the overall demand from the downstream industry. Additionally, the German construction industry continued to diminish despite the continuous demand pressure imposed by rising interest rates and high prices for other petrochemical products. European Central Bank (ECB) recently raised the interest rates by 50 basis points. Maintaining low-interest rates will eventually lead to a decrease in inflation as they exclude the possibility of an ongoing upward shift in inflation expectations and reduce demand.

Moreover, the sharp decline in the freight rates from Asia to Europe has resulted in better-imported material availability of Butyraldehyde in the region. Meanwhile, there were no supply hiccups, as reported by the market participants.

In conclusion, prices of Butyraldehyde in Germany were settled at USD 2429/MT with a month-on-month declination of USD 62/MT on a FOB basis during January 2023.

According to ChemAnalyst, "Butyraldehyde prices are anticipated to increase in Europe in the upcoming months due to further expectation of growing demand from the downstream paints and coating industry. Additionally, feedstock Propylene prices might have an upward trend which may positively impact the production cost of Butyraldehyde in the region. Meanwhile, imports from Asia may become costly as demand will improve soon."

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