NE Asia oxo-alcohols to stay subdued; may track C3 market

SINGAPORE (ICIS)–N-butanol (NBA) and 2-ethylhexanol (2-EH) spot markets in northeast Asia are expected to remain subdued on weak import demand from the key China market ahead of the Lunar New Year holidays.

Metal drums containing a liquid plasticizer used for coating textiles. Oxo-alcohols are used in paints and coatings. (Source: Photoalto/REX/Shutterstock)

 – Oxo-alcohols to track upstream propylene market

 – China NBA import demand poor

 – Shutdowns/reduce runs at downstream plants may last longer

The regional oxo-alcohols markets may largely track movements in upstream propylene (C3) prices in the near term.

Trades for both feedstock propylene and oxo-alcohols are likely to be confined within China’s domestic market as these deals for prompt-delivery were considered as less risky by buyers compared with imports.

Spot discussions for imports are expected to be limited.

On 18 January, NBA was assessed stable week on week at $860/tonne CFR (cost and freight) NE (northeast) Asia; while 2-EH was steady at $1,030/tonne CFR east Asia, according to ICIS data.

Upstream propylene prices have shed $17.5/tonne over the same period to  $945/tonne CFR NE Asia, the data showed.

NBA’s downstream market has remained weak, with Chinese buyers cautious about imports.

Spot prices oxo-alcohols, on the other hand, may have limited room to fall despite subdued demand as producers are constrained from reducing offers further amid strong cost pressures.

Most sellers are placing their bets on the post-Lunar New Year period, when demand is expected to pick up.

The Lunar New Year on 5 February is celebrated in most parts of northeast and southeast Asia. China will be on holiday for a full week on 4-10 February.

But actual demand for upstream propylene may only recover 15-20 days after the holiday, based on actual performance in 2017.

Most downstream plants in China are generally being taken off line or tend to operate at reduced capacity during the week-long holiday, and may take a while to resume normal operations.

Oxo-alcohols’ supply in Asia is expected to be stable in the first quarter, even though a regional plant in northeast Asia is due to undergo maintenance sometime in March, market sources said.

Focus article by Joson Ng

Additional reporting by Sikee Shi and Yiting Tang