BDO market still encounters pressure despite recent price uplift

Trading atmosphere warmed up on BDO market in late-September impacted by downstream procurement. Coupled with rising futures commodities, factories and traders were willing to purchase. Spot supply of BDO became tight and price of spot BDO stepped out bottom.

Actual trading price of spot BDO was gradually back to the mainstream level in October. Price of small orders slightly rose in mid-October.

Recent price uplift was mainly attributed to the reducing supply. Increasing BDO plants had turnaround in September, resulting into rapidly falling operating rate of BDO industry, which has been around 50% for a long period. After supply decreased substantially, the inventory of BDO plants apparently fell.

On the other hand, factories focused on filling the contractual basis due to heavy losses, with very few spot supply available. It also ended up with supply crunch.

In addition, the arrivals of spot BDO from Xinjiang have become scarce since end-September. Some buyers became more active in restocking with the worry of supply. As a result, spot supply of BDO tightened further.

The capacity in Xinjiang accounts for around 26% of total capacity, greatly impacting supply of BDO. Meanwhile, some units are under maintenance in this period. Due to constrained arrivals of BDO from Xinjiang, coupled with the production curtailment, the overall supply and demand of BDO market is notably affected in short run.

With falling supply but slightly warming demand recently, price of BDO slightly moves up.

The production of BDO has been greatly scaled down due to heavy losses. Higher price will also stimulate later supply. Above 400kt/year of capacity is scheduled to be put production in Q4 2024. Some units that have cut production for a long period may also restart operation after price warms up. Cautious mindset is suggested to this round of price increase. Along with the uplift, there are still many bears later.