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What is keeping Chinese Butanediol on a downward trend?

What is keeping Chinese Butanediol on a downward trend?

  • 12-May-2022 6:09 PM
  • Journalist: Jai Sen

Qingdao, China: In China, Butanediol prices have dropped over the past month. The key reason for the price decline is the bearish sentiment market, where demand for BDO has dropped, and manufacturers are offering the product at a discount, which has been evident as spot market prices have lowered. Although the drop in prices has impacted manufacturers' profit margins, manufacturers still enjoy a significant profit margin of more than 50%. FOB Qingdao rates for the week ending April 22nd were assessed at USD 4300 per MT.

On the downstream side, the PBAT prices have dipped in tandem with the falling feedstock BDO prices. PBAT prices fell on the back of mounting inventories and sluggish demand in the Chinese domestic market during the last week. Weakened demand from biodegradable industries has dragged the prices on a downward note.

Meanwhile, manufacturers' quotations have also declined, indicating a negative market sentiment. Thus, the FOB prices declined by 0.8% and settled at USD 3613/MT at Qingdao port until May 6th.

According to ChemAnalyst, the shipping volumes are declining. Some domestic facilities reopened recently. Hence the supply side's positive support declined—the terminal's ability to convey shipments at higher costs. The downstream entered the market to observe and wait, making careful acquisitions and weakening the negotiation environment.

Plants that were shut down or had scheduled maintenance have now reopened due to the present market condition. Overall downstream demand is weak, with contract trading dominant and spot purchases limited. The local BDO market should continue to solidify.

Buyers worldwide will ultimately be responsible for the additional shipping and storage costs. Rising freight prices could impact global trade as China experiences its worst outbreak. If the delays continue for a long time, other ports may not cover the gap. Several factories are finding it difficult to maintain momentum due to COVID restrictions.

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