Lead: Driven by a sharp decline in crude oil prices, the drop in propylene, a key feedstock for n-butanol, has accelerated significantly. As a result, n-butanol production costs have fallen notably, turning losses into profits. However, increased bearish sentiment in the market has led to sluggish trading, with factories continuously cutting prices to stimulate demand. Consequently, the market price of n-butanol has plummeted.

I. N-Butanol Prices Shift toward the Lower End

Recently, domestic n-butanol market prices have been continuously declining. First, as the downstream sector enters the off-season and suffers substantial losses, overall downstream operating rates remain low, leading to a noticeable drop in demand for n-butanol. Second, due to the persistent decline in crude oil prices, the price of propylene—a major raw material—has been falling steadily. This has significantly reduced n-butanol production costs, allowing n-butanol profit margins to recover. However, it has also intensified bearish sentiment among downstream buyers and market participants, resulting in a decrease in overall domestic market inquiries, low trading volumes, and rising inventory levels at production plants as sales slow. To manage inventory, factories have repeatedly lowered prices to stimulate the market, pushing the price center closer to the year's low. Nonetheless, the overall effect has been unsatisfactory, with trading remaining bleak.

Table 1: Domestic N-Butanol Market Prices by Major Region (CNY/ton)

| Product | Region | June 5 | June 26 | Change | Change (%) |
|---------|--------|--------|---------|--------|------------|
| N-Butanol | Shandong | 6700 | 6200 | -500 | -7.46% |
| N-Butanol | East China | 6800 | 6250 | -550 | -8.09% |
| N-Butanol | South China | 6600 | 6275 | -325 | -4.92% |
| N-Butanol | Henan | 6600 | 6150 | -450 | -6.82% |

II. New Capacity and Restart of Maintenance Units Worsen Supply Glut

With the successful commissioning of new production capacity and the gradual restart of previously overhauled major production units—despite some unexpected short-term shutdowns—the supply of n-butanol in the domestic market remains ample. In addition, inventories have increased due to earlier sluggish sales. The downstream sector is not optimistic either: although operating rates have slowly picked up, heavy bearish sentiment has kept downstream buyers reluctant to purchase, limiting procurement to low essential needs. Overall market inquiries and transactions remain poor. As a result, the oversupply situation in the n-butanol market shows no signs of easing.

III. Continuous Decline in Raw Materials Restores N-Butanol Profitability

The raw material propylene fell first due to the impact of crude oil prices, and then the weak performance of propylene downstream sectors further accelerated its decline. Although n-butanol prices also dropped simultaneously, the overall decline in propylene was greater than that of n-butanol. Consequently, n-butanol profitability has recovered, turning from a loss into a profit and ending the previous period of negative margins. As of June 26, the profit margin for n-butanol in the Shandong region was 354 CNY/ton.

Table 2: Comparison of N-Butanol, Raw Material, Cost, and Profit Data (CNY/ton)

| Item | Region | June 5 | June 26 | Change | Change (%) |
|------|--------|--------|---------|--------|------------|
| N-Butanol | Shandong | 6700 | 6200 | -500 | -7.46% |
| Propylene | Shandong | 8950 | 6910 | -2040 | -22.79% |
| Cost | Shandong | 7142 | 5846 | -1296 | -18.15% |
| Profit | Shandong | -442 | 354 | +796 | +11.15% |

IV. Market Outlook

Looking ahead, the propylene market is still expected to decline further due to falling crude oil prices, which will drag down n-butanol production costs and intensify bearish sentiment. On the supply side, as n-butanol units resume operations and increase operating rates, supply will continue to grow. On the demand side, downstream sectors such as butyl acetate and butyl acrylate are also restarting their units, so overall demand is expected to rise. Nevertheless, the oversupply situation in the domestic n-butanol market will persist. It is anticipated that factories will continue to offer price concessions to maintain low inventory levels. Therefore, domestic n-butanol market prices are expected to remain in a downtrend with volatility.