For the Quarter Ending June 2021
The resumption in industrial activities in the US Gulf Coast improved the supply outlook during the second quarter of 2021. However, some hinderance was observed as the colonial pipeline was shut for a week due to the cyber-attack in the second quarter. Amidst the recovered supply chains and continuous industrial activities, the demand supply gap narrowed which provided a further ease in prices in the regional domestic markets. Demand remained firm as orders were piled up, along with the continuous demand from the rubber and pharmaceutical industries.
During the second quarter of 2021, market activities remained subdued in the Asia Pacific region due to unprecedented rise in Covid cases. The second Covid wave in India restricted the public movement thus lowering the offtakes from bulk buyers. As a repercussion of reduced market activities in India and the surged inventories level, prices of n-Heptane stabilized in the Indian market with discussions drifting to USD 1824 per tonne in June. In China, import of the brent crude oil surged, which proportionally improved the availability of n-Heptane in the Chinese domestic market. In China, offtakes remained consistent from the rubber industries and pharmaceutical sector.
The n-Heptane market in the European region showcased mixed sentiments during the second quarter. In the first half, supply remained constraint owing to the low production levels at several manufacturing facilities. Whereas condition improved in the second half, as the supply chain restored with better distribution practices of crude oil. Demand remained persistent from downstream rubber and pharmaceutical sector. As a ripple effect, prices in the European region remained stable to firm in the second quarter of 2021.
For the Quarter Ending March 2021
The North American region experienced the severe downfall in the crude oil inventories as the extreme freeze weather conditions in Texas and nearby of US Gulf coast area resulted in curtailed petrochemical production as several Naphtha crackers opted for force majeures in the region. Exxon Mobil shut its 369,024 bpd Beaumont refinery and 560,500 bpd Baytown refinery and several chemical plants in Texas along with its Louisiana, plants also facing operational issues. Reduced upstream run rates coupled with market tightness prompted ExxonMobil to increase the prices of n-Heptane by USD110/MT in March.
n-Heptane supplies were tight in the APAC region during Q1 2021, amidst major converters responding to the Saudi Aramco’s output cut in Crude Oil extraction by 1 Million barrels/day which proportionally surged the prices of crude barrels across in the Asian markets. Demand in the region surged as the buyers started to stockpile their inventories ahead of Chinese lunar new year holidays and uncertainty over import supplies. Due to sharp rise in upstream rates and shortage in market supplies, price of n-Heptane in the Indian market surged USD 1775/MT for April deliveries.
The supplies of n-Heptane in the region were constrained, owing to reduced imports from overseas throughout the quarter due to surging freights, higher shipment cost and Suez Canal blockage. Naphtha crackers in the region were heard operating at reduced capacity due to severe freeze weather conditions in the northwest Europe. Demand however surged due to consistent offtakes from the downstream solvent sector throughout the quarter.
Buoyed by increasing demand and maintenance turnarounds reported by some Chinese producers, n-Heptane offers were raised by a significant percentage in Q4. The price of n-Heptane was susceptible to huge fluctuations in the quarter due to volatile upstream dynamics. Resilient demand during the fourth quarter from the pharmaceutical industries raised the market sentiments. Price surge was driven by increasing cost pressure on the raw material front because of restricted and delayed overseas shipments. An uptrend was observed on the global level due to rising efforts for sustained economic and financial revival.
Alleviating demand for n-Heptane from the pharmaceutical intermediates and industrial solvents endorsed the product’s market outlook in Europe. Firming crude oil, however created a hazy picture in the European Union which was heard planning to increasing its crude oil imports to support the economy. In early November, the accessibility of Europe for n-Heptane improved as feedstock constraints in the upstream market had mostly been leveraged because of sustainable recovery policies along with supply chain. Several European countries were heard emerging from the crisis at varying rates as plant utilization rates gradually enhanced due to significant pick-up in demand.
Supply of n-Heptane eased after mid-October as producers increased production rates after plant outages caused by seasonal hurricanes. With most manufacturers eyeing on recovery in demand post the roll out of vaccine towards the year-end, operating rates were pushed higher by December. Recovery in upstream crude oil prices, however capped the producer’s margins. The growing demand for high purity material from the pharma industry, combined with an uptrend in paints and coatings manufacturing boosted the market sentiments.