For the Quarter Ending September 2023
The U.S. n-Heptane market in Q3 2023 saw a boost in prices thanks to the improvement in WTI prices and strong demand from the paints and coatings industry. The rising cost support from raffinate and heavy aromatic naphtha prices, coupled with a robust construction industry, contributed to the upward trend in n-Heptane prices. While the construction industry maintained its strength throughout the quarter, the output slowed compared to the previous quarter. WTI prices surged in the second half of the quarter due to OPEC+ production cuts, ensuring a bullish sentiment in the market. N-Heptane prices in the U.S. consistently rose in the first two months of the quarter but stabilized in the third month. Consequently, by the end of the third quarter, n-Heptane prices in the USA were assessed at USD 1430 per MT on an FOB basis.
In the Asia-Pacific region, the n-Heptane market witnessed a roller-coaster ride of sentiments in Q3 2023. The quarter commenced with a price dip, attributed to feeble cost support and sluggish demand from downstream sectors. However, a change in market dynamics unfolded in July and August, leading to a significant price upswing driven by increased demand from the solvent industry and surging crude oil prices. In China's domestic market, n-heptane prices dipped in July 2023 due to steady demand fundamentals and strong support from upstream sectors. Stable demand from downstream industrial solvents and the oil extraction industry contributed to this pricing trend. Though there was an uptick in procurements, abundant stock levels limited significant changes in pricing sentiments. Domestic production remained robust, resulting in ample inventory levels in both the domestic market and ports. Production cuts by Saudi Arabia and Russia elevated oil prices, putting pressure on Heavy Aromatic naphtha and its derivatives. Moreover, Sinopec raised prices as the market rebounded following a lackluster period in the previous two months. By the end of September 2023, n-Heptane prices stood at USD 1516 per MT FOB Qingdao, reflecting the ever-evolving market dynamics and the myriad factors influencing pricing in the Asia-Pacific region.
In Europe, n-Heptane prices followed a bearish trend throughout Q3 2023, primarily due to weak demand dynamics and limited cost support from upstream sources, resulting in restricted procurement activities. The Netherlands saw n-Heptane prices continually decline over the quarter, influenced by supply-side and demand factors. Despite some improvements in crude oil prices, these factors had little impact on n-Heptane prices due to weak procurements and stable inventory levels. The construction industry's underperformance, as highlighted in Dow Chemicals' quarterly report ending June 2023, contributed to subdued demand in the n-Heptane market. Demand from downstream industries, such as oil extraction, remained stagnant. Challenges faced by olefins, aromatics, and related sectors included diminishing margins, weak demand, and limited procurement activities, primarily due to competition from Asian imports and declining energy prices. As of the end of September 2023, n-Heptane prices were assessed at USD 1595 per MT FD Rotterdam, reflecting the ever-evolving market conditions and the various factors impacting pricing in the Netherlands.
For the Quarter Ending June 2023
In American markets, n-heptane followed the price plunge in Q2 of 2023 owing to declining prices observed in crude oil, as n-heptane is produced directly from crude oil through precision refining and distillation. The value per unit quantity exported from American ports fluctuated in direct proportion to crude prices, the market noting the variation from USD 1.480659 per ton to USD 1.460663 per ton in regards to the pessimistic crude oil sentiments and a further similar trend is anticipated in the forthcoming quarters in direct proportion to the crude oil prices. Furthermore, improving demand coming from downstream pharmaceutical and other synthetic organic industries, where it is actively utilized in purification and octane rating measurements, ought to take the n-heptane prices on the uptrend in the coming Q3 of 2023. On top of that, the underwhelming performance of the construction industry and cheaper imports reaching the American ports from the producing nations have further hampered the consumption rates and eased the cost support, respectively, cumulatively resulting in further price decline.
Asia Pacific Region
The prices of n-Heptane in China have continued to follow a bearish trend similar to other saturated hydrocarbons like alkanes, haloalkanes, etc., as decelerating demand was received from the downstream pharmaceutical industry where n-heptane is actively utilized as an inert solvent for purification and recrystallization purposes. The cost of n-heptane witnessed a stable trend right from the first week of April after witnessing a slightly dipping overseas demand in March as demands related to the downstream pharma industries were not improving in the Chinese and other Asian markets. The market situation was stable, with the overall market’s supply being on the moderate side and the surplus market inventories reported by the market participants. The situation was stable, with weak demand noted, and enterprises followed up on their purchases just to fulfill their needs. Buyers showed reluctance towards high-priced goods. Nevertheless, in the Chinese market, prices are expected to take an uptrend in the coming quarter in regard to the optimistic demand from the downstream pharmaceutical industry.
The n-Heptane price in the European region witnessed a bullish trend across the entire Q2 of 2023 in the presence of promising demand incoming from the downstream pharma-based and other synthetic organics purification industries. The market situation was bullish in the entire Q2 for n-heptane as high demands were received from domestic and overseas suppliers, thereby governing high operating costs. Further, prices have increased in the presence of healthy trading activities from the participants in the region, and currency exchange-related price fluctuation from euro to USD has been appreciated. A steady flow of imports from the Asian markets further pushed up the n-heptane prices. However, in Germany bearish trend was observed in Q2 as in June, the IFO Business Climate Index for Germany fell to 88.5 points, down from 91.5 points in May, expectations were markedly pessimistic, and market participants observed the price decline toward the end of Q2 2023 and the assessment of the current situation was worst. On top of that stable crude oil and LNG market is expected to keep the feedstock cost pressure on the softer side.
In the first quarter of 2023, the n-Heptane market in the USA was in a bearish state due to weak demand and high supply, which caused prices to decrease. The reduced trading activity was a result of abundant supply and lower offers for non-premium spot cargoes. Suppliers were compelled only to buy what was necessary due to the drop in spot trading. The market fundamentals were weak, resulting in no firm bids or offers during this period. The demand for n-Heptane from the downstream solvent market decreased due to sluggish market offtakes and limited trading activities. The US market was characterized by uncertainty, which adversely impacted the trading dynamics.
The price of n-Heptane has decreased throughout the first quarter of 2023 due to slow demand and ample supply. As of March 2023, n-Heptane was being traded at USD 1508 per MT on a FOB Qingdao basis due to the absence of significant changes in the relevant factors impacting the final prices. However, the demand from downstream industries such as plastics, textiles, and electronics is expected to increase soon, which could impact the price. The upstream companies are predicted to increase their production rates in response to the demand. The price of n-Heptane further decreased in February 2023 due to lower crude oil prices and reduced demand from the plastics and electronics sectors.
Throughout the first quarter of 2023, the cost of n-Heptane in Europe remained stable. This was due to steady demand from downstream companies without any major interruptions in supplies. The supply-to-demand ratio remained consistent, resulting in only a slight price increase in January. The market was characterized by moderate demand and limited supply, leading to a bearish situation. Despite recent price reductions, the product demand remained on the negative side from the downstream industries like textiles and electronic industries due to the global economic slowdown. Purchasing activity in the European market was relatively stable during the first quarter, with no significant changes.