Europe BDO demand remains soft, uptick in Sept less likely

Author: Eashani Chavda


LONDON (ICIS)--European butanediol (BDO) demand remains low in early September while expectations of a post-summer uptick in activity are diminishing.

Lengthy supply continues to dominate market fundamentals with ample availability from both domestic and overseas suppliers.

“[The market is] extremely long and everyone is begging me to take material,” claimed one European buyer.

In Europe, production is running smoothly. There were no reported outages planned for September.

Poor demand from the key derivative market polybutylene terephthalate (PBT) has especially depressed BDO buying appetite and contributed to surplus BDO volumes being available this quarter.

Demand remains soft as a result of continued weakness in the automotive industry.

“The trend will be downward in Q4 and for me even 2020 will be on that level because derivatives of BDO like PBT’s demand is quite low. Automotive is not expected to rebound next year,” stated a European buyer.

Activity this month was expected to firm as traditionally occurs following the summer lull.

So far business remains quiet, though it may be too early to tell whether buying appetite will remain subdued in the coming weeks.

“It's a mixed picture,” stated one European producer.

“I perceive the market as relatively quiet. No import/export panic. What will give the market stability is the China market seems to be robust where it is now. There’s no real arbitrage gap open to Asia.”

In China, average operating rates increased to 60.8% this week, according to ICIS data.

In Asia buying interest is sluggish and though Chinese domestic spot prices are stable activity is limited due to uncertainties dampening market sentiment.

US-China trade tensions and Brexit continue to cast a shadow over global consumer confidence.

Meanwhile, US Ashland's sale of its composites division and BDO plant based in Marl, Germany to INEOS closed this week.

The sale is not expected to have an impact on BDO production this month.

The European fourth-quarter contract negotiations will begin in late September.

Players are looking to September business with anticipation as supply and demand fundamentals will drive negotiations for the fourth-quarter contract price.

So far this year, the quarterly contract price has fallen by a total of €270/tonne, according to ICIS data.

BDO is a chemical intermediate used in the production of high performance polymers, solvents and fine chemicals.

A focus article by Eashani Chavda