[Industry Focus]：The contest between isobutanol and n-butanol: who is influencing the market trend?

Since the second half of the year, the trend of n-butanol and related products octanol and isobutanol has deviated significantly. Entering the fourth quarter, this phenomenon continued and triggered a series of follow-up effects, which indirectly benefited the demand side of n-butanol and provided positive support for its shift from unilateral decline to sideways.

In our daily research and analysis of n-butanol, related products are the key reference indicators. In the existing associated products, the effect of octanol and isobutanol on n-butanol is particularly significant. In the second half of the year, the price difference between octanol and n-butanol is obvious, while isobutanol is normally higher than n-butanol. This phenomenon has a significant impact on the supply and demand structure of n-butanol, and has an impact on the trend of n-butanol in the fourth quarter.

Since the fourth quarter, according to the monitoring of downstream start-up data, we found that the operating rate of butyl acrylate, the largest downstream product, has decreased significantly, resulting in a significant downward trend in the demand for n-butanol. However, in the context of increasing supply, the market expects that the future n-butanol industry chain will quickly accumulate inventory, triggering the fermentation of bearish sentiment. In this context, the market side of n-butanol has seen a decline of more than 2000 yuan/ton. However, the weak expectations in reality encountered a strong reality, and the actual performance of the n-butanol market in November deviated significantly from the previous expectations. In fact, despite the lack of high start-up support for the largest downstream butyl acrylate, the increase in the operating rate of other downstream products such as butyl acetate and DBP was significant, which supported the current n-butanol from a unilateral decline to a sideways run. As of November 27, Shandong prices of n-Butanol between 7700-7800 yuan/ton, it has been sideways near this point for three consecutive weeks.

There are several versions of the market's interpretation of the changes in the main downstream consumption, but the increase in the operating rate of the downstream plasticizer DBP industry and the continued low inventory situation do go against the industry's traditional off-peak season performance. We believe that the emergence of the above phenomenon is not only closely related to the downstream stage replenishment, but also closely related to related products, and has a continuous impact on the market end of the positive butanol.

In the past five years (2018-2022), the average price difference between octanol and n-butanol was 1374 yuan/ton. When this price difference is higher than this value for a long time, it may cause the switchable device to choose to increase octanol/decrease n-butanol. However, since 2023, the price difference has continued to expand, reaching 3000-4000 yuan/ton in the third and fourth quarters. This extreme high price difference has attracted switchable devices to choose to produce n-butanol, which has an impact on the demand side of n-butanol.

With the expansion of the difference between octanol and n-butanol, there has been a significant substitution phenomenon in the field of downstream plasticizers. Although the proportion of DBP in the field of plasticizers is not large, as the price difference between octanol and n-butanol expands, the price difference between DBP and octanol plasticizers is also expanding. Based on cost considerations, some end customers have moderately increased the use of DBP, which indirectly increased the consumption of n-butanol, while the corresponding use of octanol plasticizers has declined.

since the third quarter, the difference between n-butanol and isobutanol has undergone significant changes. With its good fundamental support, isobutanol has gradually changed from lower than n-butanol to normal higher than n-butanol, and the difference between the two has reached a new high in recent years. This price change has a significant impact on the consumption of isobutanol/n-butanol. As the cost advantage of isobutanol plasticizers declined, some downstream customers began to adjust their production formulations to DBP, which has a greater cost advantage. According to the report of Zhuochuang Information, since the third quarter, the operating rate of a number of isobutanol plasticizer factories in northern and eastern China has declined to varying degrees, and some factories have even turned to the production of n-butanol plasticizers, which indirectly boosts the consumption of n-butanol.