Chinese BDO Update

China BDO Market Keeps Soaring with No Downtrend in Short Term

2016-12-06    [Source:PUdaily]

China BDO market keeps soaring more fiercely after stepping into November, up by RMB 1,400/ton to reach RMB 10,000/ton from Nov. 1 to Nov. 23 within nearly a month. High prices are frequently heard in the market. After a thorough check, PUdaily find the reasons are as following:

Firstly, according to the Economic Observer, after on September 21st the government announced the new rule on Car, Car and Trailer Train Dimensions, Axle Load and Limit Value, the national railway freight volume has increased sharply. The new national standard on truck and overloading bring about new and large-scale regulation and management activities, which are enforced strictly, and there is obvious shrinkage tendency on road transportation volume. According to report, some companies have raised the transportation price by about 30%, which helps to benefit the rail way transportation that are much cheaper, stable, and unaffected by weather changes, this is especially the case for long-distance transportation. Because the railway transportation gradually become tense with orders, the delivery time from Xinjiang, Inner Mongolia and other areas is extended, resulting in a slow delivery of BDO.

Secondly, the BDO supply is decreasing because some BDO facilities were shut down for maintenance. Xinjiang Markor shut down its second phase and third phase facilities in early Nov. and in late Oct. respectively for replacing catalyst. One BDO facility at Xinjiang Tianye was closed for maintenance on Oct. 21. Henan Coal shut down its two facilities on Nov. 12 and Nov. 17 respectively for maintenance.

Thirdly, downstream PTMEG, GBL, PBT and TPU factories have decent operating rates so that demands will keep at regular level, which underpins the whole BDO market to some extent. Shandong Changxin, which is the biggest GBL factory in Shandong, was shut down in late Sep., has restarted recently, leading to more BDO demands.

Looking at future market, China BDO market is expected to keep firm in short term. On the one hand, BDO facility at Sinopec has restarted and the second phase and third phase Xinjiang Markor facilities have return to normal running, which will result in growing supply at home accordingly. However, two lines of BDO facilities at Henan Coal were shut down to have maintenance on Nov. 12 and Nov. 17 respectively. On the other hand, owing to poor transport, it still takes some time for Xinjiang source to be delivered, which will contribute to underpin the market continuously. Nevertheless, downstream buyers have strong conflict to the increasing BDO prices, which will force them to reduce their operating rate of the plants. Some PBT plants were heard decreasing their operation rates due to the high BDO price. And overall operating rate in downstream industry have risk of dropping after stepping into the middle of December, BDO market is thusly estimated to have the risk of softening by then.

Editor: Lily

Email: ly@chem366.com

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