Asia BDO appears to consolidate after months of decline; outlook remains unclear

SINGAPORE (ICIS)–The Asia butanediol (BDO) market continued to consolidate after months of decline, with prices holding in a steady range at around $1,160/tonne CFR (cost and freight) China in recent weeks.

The output cuts in China from maintenance shutdowns from early June brought the average operating rate of plants down below 30% in June, from the high 40%s in late May.

The drop in output helped stem the decline in domestic prices, providing a boost in sentiment for Asian suppliers.

“We expect the market to bottom out in June or July with supply curbs in China providing support,” said a supplier in Asia.

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

At the same time, margins for BDO have been severely eroded by the downtrend with some suppliers already in the red.

“We are having very limited margins if any, and most sellers cannot lower prices much more,” said another supplier.

While the market could bottom out from here, players generally believe that a significant uptrend is unlikely, given that demand remained in the doldrums.

With economies in Asia and Europe opening up, demand for finished goods remained at a low ebb. Some participants think a more significant recovery could only appear from the fourth quarter.

“The BDO market could stay flat for some time, even though it is no longer going lower,” said a buyer in NE Asia, citing a lack of recovery in the downstream sectors.

Photo: BDO is used to make paint thinner and other solvent products (Oleksiy Maksymenko/imageBROKER/Shutterstock)

Focus article by Clive Ong