Oxo-alcohols rise, slide, and rise again

30 October 2006 00:00  [Source: ICB]

Oxo-alcohol prices slip-slide about

STEEP HIKES in domestic prices of oxo-alcohols in China, following large falls in September, have sidelined buyers and sellers, forcing them to again adopt a wait-and-see stance.

Oxo-alcohol prices hit 10-year highs in early August because of extremely tight supply.

But massive downward price corrections in the Chinese market followed in late September, as the rapid price hikes left many end users unable to cope.

Prices of domestic normal butanol (NBA) fell by as much as 3,300 yuan (CNY) ($418, €332)/tonne in just a week during the downward adjustment.

Prices rallied as buyers restarted buying after weeks of slow trade because of the fluctuations in prices and the Chinese National Day holidays.

Tight supply resurfaced, prompting producers and traders to raise their offers.

NBA prices recently rose by more than CNY2,500/tonne, to more than CNY16,000/tonne delivered eastern China.

Activity temporarily stalled as buyers and sellers monitored the market and came to terms with the new numbers.

Buyers said that, in view of the rapidly increasing prices, they were hesitant to buy and were awaiting another downturn.

"These large rises are not sustainable.

"The downstream sectors cannot support feedstock prices at these levels," said a buyer, who expected prices to fall again within the next few weeks.

A trader added: "The large fluctuations in prices have also sidelined traders.

"The risk factor is becoming too large and we have to sit out this sector and not take any positions for now.

"Moreover, cargoes have been increasingly hard to secure."

Demand has continued to outstrip supply this year, with a spate of shutdowns in the second half, exacerbating the tight supply situation.

Domestic inventories of NBA in China were said to be low, with some producers producing more 2-ethylhexanol (2EH), and therefore less NBA, in their swing NBA/2EH plants.

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