BDO still has downside

Maintenance equipment restarts downstream demand off-season

　　Since mid-March, the 1,4-butanediol (BDO) market has opened a downward channel due to sufficient supply, weak downstream demand and insufficient cost support
.
As of June 24, the mainstream price of BDO in the East China market was 20,800 yuan (ton price, the same below), down 7,550 yuan or about 27% from March 10
.
Looking at the market outlook, industry analysts believe that under the influence of unfavorable factors such as the restart of BDO maintenance equipment, poor factory auction transactions, and the weakening of the main downstream polytetramethylene ether glycol (PTMEG)-spandex industry chain, it is expected that BDO The market still has downside risks in the short term
.

　　Sufficient supply

　　The price of BDO mainly depends on the supply and demand in the market
.
At present, due to the accumulation of inventory in the unsupported downstream BDO factories, the preliminary maintenance devices have been restarted one after another, and the superimposed new production capacity is expected to be launched in the second half of the year, and the BDO market is sufficiently supplied
.

　　"From the end of May to now, the BDO factories that have been overhauled in the early stage include Shaanxi Ronghe Chemical Group Co.
, Ltd.
60,000 tons/year unit, Shaanxi Hancheng Heimao Chemical Co.
, Ltd.
60,000 tons/year unit, Henan Hebi Coal Chemical Co.
, Ltd.
100,000 tons/year The annual plant and the 200,000-ton/year plant of Xinjiang Guotai Xinhua Mining Co.
, Ltd.
have been restarted one after another, and the overall supply of BDO has increased
.
" said Yang Juan, a BDO analyst at Zhongyu Information
.

　　Longzhong Information BDO analyst Wu Lili said that in the second half of the year, Ningxia Wuheng Chemical Co.
, Ltd.
had a 116,000-ton/year plant, Inner Mongolia Dongjing Bio-Environmental Technology Co.
, Ltd.
had a 200,000-ton/year plant, and Wanhua Chemical Group Co.
, Ltd.
(Sichuan) The 100,000-ton/year plant and the fourth-phase 100,000-ton/year plant of Zhongtai Group Xinjiang Meike Chemical Co.
, Ltd.
are expected to be put into operation.
The supply of BDO has increased, and the bearish sentiment in the field is strong
.

　　According to the monitoring data of Longzhong Information, as of June 23, the overall operating rate of the BDO market was 81.
5%, an increase of 12% from the beginning of June
.
It is expected that the supply of BDO market will further increase significantly in mid-July, and the operating rate may be roughly increased to around 85.
5%
.
In addition, some unsupported downstream BDO factories have accumulated inventory, the pressure on shipments is relatively large, and the support on the supply side is weakened
.

　　Downstream sentiment is lower

　　BDO's main downstream PTMEG-spandex industry chain accounts for 53% to 54% of the total BDO consumption, especially spandex is the most critical downstream product that affects the BDO market trend in the past two years
.

　　Since the beginning of 2022, the spandex market has been affected by the decline in the start of terminal textiles and the weakening of domestic and foreign demand, and factory inventories have continued to accumulate
.
In order to ease the sales pressure, the spandex factory continued to negotiate profits, and the market price of PTMEG-spandex industry chain kept going down
.
Among them, the mainstream price of 40D spandex has dropped from 60,000 yuan at the beginning of the year to the current 41,000 yuan, a drop of 31.
7%; the negative factors are transmitted upward, and the price of 1800 relative molecular mass PTMEG has dropped from 47,000 yuan at the beginning of the year to the current 36,000 yuan.
A drop of 23.
4%
.

　　"Recently is the off-season for the downstream of BDO, and the overall demand is weak
.
For example, downstream construction such as spandex is at a low level, and prices continue to fall
.
Although the operating load of other downstream polyurethane (PU) and thermoplastic polyurethane (TPU) slurries is maintained at 50-60%, due to the downstream Demand is in the off-season, and companies are mainly following up with rigid needs
.
The overall demand is weak, and it is difficult for BDO prices to rise
.
” Yang Juan said
.

　　Except for the poor performance of the PTMEG industry, the rest of the downstream demand is mainly based on contract and rigid order purchases, which has limited boost to the market
.
For example, the recent operating rate of the polybutylene terephthalate (PBT) industry is at 50-60%, the downstream follow-up is difficult to see improvement, the cost support is weak, and the short-term market is hindered; polybutylene terephthalate The (PBAT) industry is suppressed by cost and demand, the start of construction is at a low level, the production of new production capacity is slow, and the demand support is weak
.

　　less cost impact

　　The acetylenic aldehyde method is the mainstream process route of BDO production in China, and the production capacity accounts for nearly 90%
.
Since the prices of the main raw materials calcium carbide and methanol have been relatively stable in recent years, the price of BDO is basically not affected by the raw materials
.

　　"Since mid-March this year, China's methanol inventory has shown a gradual increase
.
Taking port inventory as an example, as of June 15, China's methanol port inventory has reached 1.
0235 million tons for the first time since mid-January 2021.

Later, China's methanol imports arrived.
The port volume may not be reduced, and the port inventory is unlikely to decline in the short term, so the port methanol market price is under great pressure
.
" said Cui Zhiming, methanol analyst at Longzhong Information
.

　　In addition, the market price of another raw material calcium carbide fell slightly last week
.
As of June 24, the mainstream price in the northwest region was 3,650-3,900 yuan, down 50 yuan from the beginning of the week
.
Under the pressure of cost and inventory, calcium carbide's rising momentum is insufficient
.
It is expected that the price of calcium carbide may fall within a narrow range
.

　　Yang Juan said that the impact of cost on BDO is relatively small.
At present, the cost of the acetylenic aldehyde method is about 10,000 to 11,000 yuan, but the overall profit is nearly 10,000 yuan based on market prices
.
At present, BDO is a high-profit product.
Even if the cost of raw material methanol and calcium carbide fluctuates in the range of 1,000-2,000 yuan, it has little impact on the price of BDO
.

　　Due to the lack of obvious positive support in the BDO market as a whole, the mentality of the industry is cautiously bearish, and the online auction transaction of BDO manufacturers is flat
.
Recently, some factories' crescent listing prices have fallen
.
For example, Xinjiang Lanshan Tunhe Chemical Co.
, Ltd.
announced on June 21 that the listing price of BDO East China market in July was 22,300 yuan, which was 100 yuan lower than the listing price in June and 1050 yuan lower than the settlement price in May
.

　　Looking at the market outlook, as the listing price and settlement price continue to fall, which affects the market's sales mentality, most of the goods-holding manufacturers ship their goods for profit, and there is still room for downside for BDO in the short term
.