Price and market trends: Europe Q3 BDO demand outlook steady to soft, but pricing unclear

14 June 2013 09:48  [Source: ICB]

New production capacity in China and imports from Asia may pressure prices

While the pricing outlook for the European butanediol (BDO) industry in the third quarter remains unclear, the majority of players expect steady-to-soft demand, in a balanced market, sources said on 4 June.

A buyer said: "Actually, it is too early to say what the market will be like in Q3. Our BDO ­demand is good, similar to what it was in the same period last year." It added that its demand last year was high: "My expectation is to see Q3 BDO prices go down, because [demand for] some BDO ­applications is going slowly."

 Pace and direction of BDO market is not easy to predict

Copyright: Rex Features

BDO demand is steady at a low level because the economic downturn has in turn reduced consumer confidence.

Offtake is likely to remain stable through June and into the first half of July, after which it is expected to soften, as is usual in the summer months, when players break for holidays.

Another consumer said: "The markets are quiet at this moment and steadily going on. We expect the [traditional] small summer dip in July/August in our polybutylene terephthalate (PBT) production and demand. But for the rest, no big changes and no upward or downward trends."

While producers were not able to give any indication as to what would be targeted price-wise in Q3, one producer said it is trying to hold on as much as it can to its margins.

Additional BDO capacity started up in China in the first half of this year, and imports from Asia in the third quarter are expected to put some downward pressure on pricing, sources said.

"The European market will see more quantity coming from Asia," the first buyer said. "And BDO prices in Europe have increased too much, if compared to the US market."

Another consumer said it had planned for a Q3 rollover, but said it is too early to comment as it has not yet ­received any indication from its supplier.

"Our demand is quite good," a distributor said. "We're running with good sales and a relatively large order intake, especially from the thermoplastic polyurethane (TPU) sector.

"We can't complain too much, the industry is doing relatively well, although the customers are saying the raw material prices are too high and that they can't pass on the prices."

A clearer pricing and demand picture for the third quarter is likely to emerge in the next ­couple of weeks.

BDO is used industrially as a solvent and in the manufacture of some types of plastics, elastic fibres and polyurethanes (PU).

Almost half of it is dehydrated to tetrahydrofuran (THF) to make fibres such as elastane (or ­spandex).

By: Helena Strathearn
+44 208 652 3214

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