For the Quarter Ending June 2023
In the USA, the demand for the Butyl Glycol market slumped in the wake of low market fundamentals and rising product inventory among the significant production units. The trades of Butyl Glycol from the USA declined due to limited inventory utilization and weak trading fundamentals. In terms of stocks, with a slump in trading fundamentals, producers declined their offers to clear their inventory level. The demand for Butyl Glycol from downstream Paint and coating industries started to decline with weak cost support from the end-user industries. In the US market, the demand for Butyl Glycol declined, and cargoes were traded at declined prices. Loosening market trading activities and sufficient feedstock availability in the region capped the prices from increasing further. However, slower end-product sales and chronic cash flow problems continue to weigh on activities in the regional market this quarter. Due to the low demand for downstream industrial, commercial, and household cleaning products, the declining price trajectory of Butyl Glycol was observed.
Butyl Glycol has seen a decline in prices this quarter due to reduced prices of upstream n-Butanol and Ethylene Oxide. The demand from downstream industries has been low from domestic as well as Asian markets leading to a decline in prices. The market demand was bearish, with a slight decline in feedstock Ethylene oxide prices in the region. The production rate among the major enterprises declined to avoid stockpiles. Downstream enterprises also follow weak market fundamentals with deterred markets. Butyl Glycol's average production rate in South Korea ended on a weaker note due to sufficient supply. In terms of the trading dynamics, the export market remains affected by sufficient stocks of butyl Glycol in the Southeast Asian market. In June 2023, the price of Butyl Glycol in June declined to USD 1470/ton FOB Busan. In the Asian market, Slumping freight rates, piling stocks among the ports, and lower netbacks in the Southeast Asian market remain major factors for weak market fundamentals. With abundant supply, suppliers were giving discounts on bulk purchases to clear their inventories.
An abundant supply of Butyl Glycol in the Saudi Arabian market resulted in muted trading activities with revision in the price trend among the suppliers. The bids and premium offers of Butyl Glycol slide further, and market fundamentals remain deterred by slow market offtakes. The impact of sluggish global economic growth and further rate hike fears by global banks remain the significant reason for weak trading fundamentals. It remained difficult for Butyl Glycol suppliers and distributors to find buyers in the downstream solvent and Paint industries due to weak end-user purchasing interest and narrowing profit margins. For this quarter, Butyl Glycol prices in the Middle Eastern market are slumped with limited purchases. In Saudi Arabia, the price of Butyl Glycol during June 2023 declined to USD 1030/ton FOB in Jeddah. A slump in demand from the downstream Paint and coating industries and declining consumer spending have reduced commerce, which has declined the Butyl Glycol. Due to limited product consumption, significant manufacturing units offered discounts on bulk purchases.
In Q2 2023, the Butyl Glycol market remains sluggish due to limited trades and recession fear in the European market. As German Butyl Glycol supply was adequate and pricing pretty much flat despite deep operating rate cuts, German exporters remain skeptical about increasing the price trend for the domestic and overseas markets. The price downtrend seen in the petrochemical markets in June was mainly driven by stable-to-soft upstream crude oil costs in June, as well as subdued demand for petrochemicals caused by persistently high costs of borrowing and fears of a possible recession. The demand for Butyl Glycol from the downstream Paint and coating market also plunged, and the trades were majorly on an immediate basis. In June 2023, the price of Butyl Glycol in Germany declined to USD 1325/ton FOB Hamburg. Downstream demand destruction caused by ongoing economic woes has prompted buyers to renegotiate contractual offtakes for the remainder of the quarter. Some buyers are even considering procuring from the spot market instead to take advantage of lower prices on offer.
For the Quarter Ending March 2023
During the first quarter of 2023, the cost of Butyl Glycol witnessed a mixed trend in the USA market. The feedstock Ethylene Oxide remained expensive for the last two months of the quarter due to the various plants' shutdown, which affected the production of raw materials. Further, the feedstock supply began tight, and inadequate availability of the product increased the price of downstream commodities, including the Butyl Glycol market. The supply chain activities improved in the mid-quarter, which improved offtakes amid rising inflation and high-interest rates by Federal Reserve.
The price of Butyl Glycol witnessed an inclining trend throughout the first quarter of 2023. The demand for the product was improved from the downstream industries, such as paint and toiletries, in the Indian market. Further, expensive imported cargo from the Europe that was bought for the Indian market affected the price pattern in the northern direction. Along with this, inventory from Europe was reduced owing to ongoing factors. Indian traders were unable to cater to the demand from the downstream industries, which ultimately drove the cost drastically in the market. On the other hand, China followed the same price pattern and noticeably increased demand from the downstream Glycol producers throughout the first quarter.
The price trend for Butyl Glycol remained low in the European region throughout the first quarter of 2023 due to the weak cost pressure from feedstock n-butanol. The inflation and high-interest rates hampered the demand for the product from the downstream industries. Further, the manufacturers quoted offer prices due to their high availability in the market. The product price dropped, and fewer new orders from domestic and overseas markets were received. As interest rates rise, demand often drops, which might be negative for the paint and coating industry.
The same trend was observed in the North American and European butyl glycol markets this quarter. Upstream productions were limited because of the average demand for this commodity from businesses downstream. Ethylene oxide and n-Butanol, the base materials used in the production of this product, saw significant price reductions as a result of lowered prices of upstream crude oil, which had an impact on this commodity's costs. The paints and toiletries industries were able to meet their production needs because this product was readily available in stores.
The market for butyl glycol declined across the entire Asia-Pacific region during this quarter as well. There are many reasons for butyl glycol's price drop in China. The provincial governments' implementation of lockdowns had an impact on the butyl glycol production industries' and paints and toiletry companies' production rates. The lower prices of upstream crude oil were another factor that contributed to the decrease in the price of this product. This quarter, the butyl glycol market in India was comparable to China's. Sellers had to lower their quotes in order to clear the stocks because of the moderate demand for this product from businesses downstream. As a result, more volumes of this commodity accumulated in inventories.
In this quarter, the markets for butyl glycol in Europe and Asia were identical. The decreased prices of n-butanol and ethylene oxide, the product's base materials, primarily influenced butyl glycol prices in Germany. It was discovered that manufacturers of paints and toiletries had a modest interest in this product because they were extremely concerned about the rising energy costs brought on by the ongoing conflict between Russia and Ukraine. Upstream businesses were not producing butyl glycol more for the same reasons, and hence, production rates were found to be average.