EU BDO players optimistic about Q1 demand on EU economic growth

05 November 2013 19:25  [Source: ICIS news]

LONDON (ICIS)--Several players in the European butanediol (BDO) market on Tuesday expressed optimism about demand in the first quarter amid forecasts that Europe's economy will register some growth.

The European Commission said earlier that real GDP is expected to grow by 1.4% in 2014. Growth for 2013 should be flat. 

However, the commission also warned about high unemployment levels, with the forecast jobless rate this year of 11.1% expected to fall only marginally next year to 11%.

BDO producers and buyers said first quarter demand is traditionally stronger than in the fourth quarter because of the inventory cuts and holiday shutdowns in December.

Demand has been sustained by continued orders from the automotive industry.

The European Automobile Manufacturers' Association, citing Eurostat data, said car exports from the EU to the rest of the world increased to over 3m units in the first half of 2013 from 2.88m in the first half of 2012.

“If you talk to market participants in the downstream segments, you’ll see that everybody has a planning scenario for a better 2014, up from 2013. That means that for the demand side, we see a more positive first quarter,” a producer said.

Some sources were concerned about the potential impact of increased BDO capacity being built in Asia, warning that this may suppress the BDO exports of European producers and therefore lead to an oversupply in EuropeTaiwan's Dairen Chemicals, for example, is building a 150,000 tonne/year BDO plant in Panjin, China, which is expected to start this year.

Still, other sources said it remains to be seen whether Asian producers can fully supply the needs of Asian buyers, noting that some Asian plants are not running at full capacity, and that Asian customers may require higher-quality BDO imported from abroad.

By: Vladimir Guevarra
+44 208 652 3214

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