Introduction
The domestic n-butanol market continued to grapple with high costs, while the supply-demand gap widened further. Bolstered by both high costs and tight supply, the market's price benchmark moved higher. Once prices climbed to peak levels, market resistance emerged, trading volumes shrank, and high prices gradually faded out.
I. N-butanol prices remained elevated after the rally
The number of domestic n-butanol units undergoing turnaround maintenance increased, resulting in a marked decline in supply. Meanwhile, some producers held low inventories, reducing spot availability. In contrast, downstream butyl acetate and butyl acrylate operating rates rose notably, boosting demand for n-butanol as feedstock and further intensifying the supply-demand imbalance. Compounding this, feedstock propylene extended gains on the back of firmer crude oil, adding to cost pressure. Supported by the dual positives of tight supply and high costs, market inquiries were brisk during this period, downstream buyers showed strong willingness to accept deliveries, market prices moved higher, and trades were increasingly concluded at the upper end of the price range.
However, after n-butanol prices surged to peak levels, market resistance gradually emerged. Consecutive declines in international crude oil dragged feedstock propylene prices lower, and downstream players, turning bearish, worked down their previously stockpiled feedstock inventories. Purchasing enthusiasm weakened accordingly, and wait-and-see sentiment built, causing trading volumes to contract. The n-butanol market subsequently entered a phase of consolidation at high levels.
Table 1 N-butanol prices in major domestic markets (yuan/ton)
| Product | Region | Aug 10 | Aug 27 | Change | Change (%) |
|---|---|---|---|---|---|
| N-butanol | Shandong | 6,600 | 7,600 | 1,000 | 15.15% |
| East China | 6,825 | 7,750 | 925 | 13.55% | |
| South China | 6,750 | 7,800 | 1,050 | 15.56% | |
| Henan | 6,825 | 7,900 | 1,075 | 15.75% |
II. Operating rate hit yearly low, intensifying supply-demand imbalance
As more n-butanol units joined the wave of concentrated turnarounds, the overall daily operating rate fell from 77.57% on August 10, with daily output of roughly 7,300 tons, to 61.21% on August 27 — down 16.36 percentage points. Daily output declined by 1,540 tons to approximately 5,760 tons, a drop of 21.1%.
Table 2 Operating rates in major n-butanol producing regions
| Region | Operating rate on Aug 10 | Operating rate on Aug 27 | Change |
|---|---|---|---|
| Shandong | 104% | 64% | -40 pp |
| East China | 77% | 55% | -22 pp |
| South China | 77% | 54% | -23 pp |
| North China | 0% | 107% | +107 pp |
| Northeast | 53% | 53% | — |
| Northwest | 27% | 27% | — |
| Southwest | 96% | 96% | — |
Thus, Shandong recorded the sharpest decline in operating rates, down 40 percentage points, as two major producers in the region — Yantai Wanhua and Shandong Lihuayi — successively shut down for turnaround maintenance. South China followed with a 23-percentage-point drop, as Guangxi Huayi's Phase I n-butanol unit entered maintenance, while East China declined by 22 percentage points. In North China, by contrast, the operating rate rose after the previously overhauled Tianjin Bohua unit resumed production.
III. Feedstock oscillated at high levels; high costs underpinned n-butanol prices
Early in the period, feedstock propylene climbed steeply. Consecutive gains in international crude oil lent firm support to propylene, while an increase in propylene supply unit shutdowns tightened market availability. Under this dual support, propylene prices surged. Later, however, as propylene reached high levels, market resistance emerged, and with crude oil trending lower, propylene prices began to oscillate downward. N-butanol likewise kept climbing on elevated feedstock costs and tight supply, with its cumulative gain exceeding that of propylene. As a result, n-butanol margins returned to profitability after being in negative territory. As of August 27, n-butanol production cost stood at approximately 6,999 yuan/ton, up 328 yuan/ton from August 10, while profit rose 672 yuan/ton to 601 yuan/ton.
Table 3 Comparison of n-butanol, propylene, cost and profit data (yuan/ton)
| Product | Region | Aug 10 | Aug 27 | Change | Change (%) |
|---|---|---|---|---|---|
| N-butanol | Shandong | 6,600 | 7,600 | 1,000 | 15.15% |
| Propylene | Shandong | 8,190 | 8,720 | 530 | 6.47% |
| Cost | Shandong | 6,671 | 6,999 | 328 | 4.92% |
| Profit | Shandong | -71 | 601 | 672 | 946% |
IV. Market outlook
On the supply side, units that entered maintenance earlier are expected to gradually restart and resume production, which will slowly ease the current supply tightness. Additionally, new units are slated to come on stream later, further increasing market supply and spot availability. On the feedstock cost front, given the significant influence of international crude oil fluctuations, upstream propylene is expected to consolidate at high levels with somewhat diminished cost-side support. On the demand side, operating rates at major downstream butyl acrylate and butyl acetate plants are expected to retreat, while downstream producers will prioritize consuming their own accumulated feedstock inventories. Overall market trading activity is therefore expected to decline. Combined with weakening market sentiment from falling international crude oil prices and heightened wait-and-see attitudes, domestic n-butanol prices are expected to trend weak with volatility in the coming period.
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