N-butanol has limited room to rise

Recently, the n-butanol market ushered in a rare volatile rise
.
Up to now, the average price of n-butanol is 7400 yuan (ton price, the same below), an increase of 1.
83% from the beginning of
the month.
Industry insiders generally believe that under the suppression of demand without substantial benefits, this round of n-butanol market upside is limited
.

Ending the decline and successfully building the foundation

"From a high of 12,000 yuan to about 6,500 yuan, the n-butanol market has declined significantly since this year, and the price is close to the waist
.
" Zhang Pengyu, a n-butanol operator in Liaoning, said that after the price of n-butanol briefly rose to its peak in the first week after the Spring Festival this year, the market began to consolidate and decline, and by August it had fallen to the low point of the year
.

The data of the trading agency also confirms his statement
.
At the beginning of this year, the n-butanol market started with an average price of 8300 yuan, and then climbed rapidly; In mid-February, the average price had reached 11,700 yuan, an increase of 40.
96%.

Subsequently, the market turned into a downward trend again, bottoming out at 6566 yuan on August 12, down 43.
87%
from the high at the beginning of the year.

In the traditional consumption season of "Golden Nine Silver Ten", the downstream operating rate of n-butanol has increased steadily, the demand recovery and the decline in supply have led n-butanol to enter the destocking stage, promoting the market to end the decline and build a successful
bottom.

"Since then, the price of n-butanol has been in a volatile upward trend
.
" Zhang Pengyu introduced that the average price rose to the 7,000 yuan line in early September, and fell to around 6,700 yuan after hovering for a few days; Then reopened the upward mode, rising again to the 7300 yuan line on September 22; In early October, it fell back to around 6670 yuan, then rose again, rising to 7870 yuan on November 4, and after that, although there was a slight correction, it always fluctuated
around 7400 yuan.

Profit compression and tightening supply

The industry generally believes that the fundamental logic that leads the n-butanol market out of decline lies in the change of
supply and demand.
Since n-butanol and octanol switchable devices account for a relatively large proportion of the industry, as the profit difference between the two increases, the switchable devices often adopt the method of converting octanol to profit adjustment, resulting in a reduction
in n-butanol market supply.

"With the downturn of the market, the industry's profits have been continuously compressed, and n-butanol companies are on the verge of
loss.
" ICIS analyst Gao Chunyou said that in the middle of this year, when the theoretical profit of octanol was significantly better than n-butanol, the production lines of Luxi Chemical, Jiangsu Huachang and Jilin Petrochemical successively switched to octanol, resulting in a decrease
in n-butanol market supply.

In addition, the shutdown of some installations in the third quarter further exacerbated the supply contraction
.
Cui Honglei, an analyst at Zhuochuang Information, said that in September, the stability of domestic n-butanol plants declined, including Luxi Chemical, Yan'an Energy, Wanhua Chemical and Qilu Petrochemical and other devices had a long shutdown, and the output decreased significantly
.

While the supply continues to decline, the downstream just needs to replenish the stock into the market, resulting in tight spot supply, superimposed on the impact of the epidemic in Shandong Province, the main production area of n-butanol, some downstream manufacturers are worried about the obstruction of transportation, and actively enter the market to purchase
.
In September, although the production of some n-butanol plants was reduced, due to the high accumulation of social inventory, the corresponding port inventory did not change much, and it remained at a high level
during the year.
In October ~ November, as the production reduction of the device continued, the social inventory of n-butanol continued to decline, corresponding to the decline in the inventory of the main port of East China, especially from the second half of October to the first half of November, the inventory of n-butanol in East China port accelerated to the low level of the year, and the market supply continued to shrink
.

In the future, Zhang Pengyu believes that after the n-butanol industry hit a weekly minimum operating rate of 53% in early November, due to the upcoming restart of Wanhua Chemical and Qilu Petrochemical Plants in the future, the operating rate of n-butanol industry will increase significantly, which is bound to suppress
the rising n-butanol market.

Changes in demand dominate the future

Cui Honglei believes that in the face of the expectation of supply improvement, changes in downstream demand will determine the future trend
of n-butanol.

The downstream products of n-butanol are mainly butyl acrylate and butyl acetate, and the consumption of n-butanol accounts for about 60% and 20% respectively, and the terminal is mostly coatings, adhesives and other industries
.
In recent years, affected by the epidemic, the construction industry has been greatly impacted, and the demand for n-butanol will inevitably decrease significantly, dragging down the domestic n-butanol consumption to continue to decline
.

From the perspective of the future market, according to the forecast of Zhuochuang Information on the start of butyl acrylate and butyl acetate in the main downstream of n-butanol in the next 2~3 weeks, the operating rate of the two is less
likely to increase in the future.
In the face of the expectation of supply recovery, if the downstream demand cannot appear in the future, the tight supply situation in the n-butanol market is expected to ease
.

In summary, in view of the fact that winter is an off-season for the paint, coating and adhesive industries, and the overall weak demand for terminal products, the n-butanol market will continue to come under pressure
in the future.
However, due to the support of raw material propylene from the cost side, the risk of market decline is small, and it is expected that the n-butanol market will fluctuate with
a high probability.