Isobutyraldehyde: Positive factors fade, difficult to sustain the upward trend
2023/5/25
Industry experts believe that the short-term tight supply in the spot market, combined with active downstream procurement, has driven the rapid surge in the isobutyraldehyde market. Looking ahead, due to changes in supply and demand and weak cost support, the isobutyraldehyde market is expected to experience short-term or minor fluctuations.
"This is the largest price increase in the isobutyraldehyde market since the second half of last year," said Gu Ping, an isobutyraldehyde distributor from Liaoning. "In the middle of last year, due to insufficient support from upstream propylene costs and poor downstream demand, isobutyraldehyde prices experienced a significant drop from around 17,000 yuan per ton and fluctuated around 6,000 yuan for most of the second half of the year."
The performance of the isobutyraldehyde market remained flat earlier this year. With a slight increase in propylene prices at the beginning of the year, downstream manufacturers actively purchased isobutyraldehyde, causing the average price to rise from around 6,700 yuan. However, the upward trend did not last, and by late February, the average market price quickly fell back to around 7,000 yuan and remained at that level until the end of April. After the "May Day" holiday, a sudden event caused a significant price increase in isobutyraldehyde, rising from 7,433.33 yuan at the end of April to 10,400 yuan on May 8th, an increase of more than 2,900 yuan or 39.91%. This was also the first time this year that isobutyraldehyde prices exceeded the 10,000 yuan mark.
On May 4th, Luhua Chemical announced an explosion and fire accident at its subsidiary, Luhua Luxi Hydrogen Peroxide New Material Technology Co., Ltd. The incident led to production stoppages and affected hydrogen peroxide, caprolactam nylon-6, and polyol units. This event has had a certain impact on the isobutyraldehyde market and has contributed to the rapid surge in prices.
Analysts from Baichuan Yingfu, an isobutyraldehyde analysis firm, believe that the suspension of production by major manufacturers has resulted in reduced on-site supply, coupled with the replenishment demand for downstream pentanediol and alcohol ester markets, and active inquiries from market participants. These factors have driven the short-term increase in isobutyraldehyde prices.
Regarding downstream pentanediol, after the "May Day" holiday, some mainstream production enterprises increased their prices, with prices rising from 10,300 yuan on April 28th to 10,800 yuan on May 9th, an increase of 4.87%. Due to the slight increase in pentanediol prices and increased production activity by manufacturers, previously idle factories have gradually resumed operations, leading to more active procurement of isobutyraldehyde.
Major producers such as Wanhua Chemical, Jiangsu Huachang, and Binzhou Zhanhua Yukai have all raised their prices for pentanediol. Currently, Wanhua Chemical offers pentanediol at 11,300 yuan in Shandong, 11,400 yuan in East China (acceptance and delivery), and 11
,500 yuan in South China. This development brings some positive factors to the isobutyraldehyde market.
However, the weakening fundamentals suggest that the current upward trend in isobutyraldehyde prices is unlikely to continue and is more likely to experience downward fluctuations.
Looking at the cost side, the propylene market has experienced a slight decline, with the average market price falling from 7,052.6 yuan on April 28th to 6,912.6 yuan on May 10th, a decrease of 1.99%. Analyst Jia Fengqi from JLC said that the domestic propylene market in May is expected to have weak and volatile trends. On the one hand, the expected increase in supply pressure, as some propane dehydrogenation-to-propylene units in Shandong plan to restart in the near future. If all units restart as scheduled, the supply of propylene in the market may significantly increase, combined with the concentrated restart of units that were under maintenance earlier, creating market impacts from the supply side. At the same time, the demand side may remain weak, with weak polypropylene futures and low operating rates for powder units, resulting in low purchasing enthusiasm from factories. Additionally, short-term shutdowns of downstream units such as acrylonitrile and butyl octanol may result in limited demand. The weakening support from upstream propylene costs will negatively impact isobutyraldehyde prices.
Regarding the supply and demand dynamics of isobutyraldehyde itself, the significant price increase in isobutyraldehyde has driven the rebound of pentanediol. However, the cost pressure resulting from this increase has caused a slight decline in profits for pentanediol producers, and the coating market, a downstream industry of pentanediol, has shown average performance. As a result, the enthusiasm of pentanediol manufacturers to purchase isobutyraldehyde may gradually diminish. The weakened support from upstream propylene costs and the fading demand for downstream pentanediol may reverse the current tight supply situation in the isobutyraldehyde market. Analysts from Shengyishe, an isobutyraldehyde analysis firm, believe that unless significant positive support emerges, the domestic isobutyraldehyde market is likely to experience minor fluctuations and primarily trend downward in the short term, influenced by supply, demand, and raw materials.
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