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Towards the end of 2024, the 2-Ethylhexanol (2-EH) market experienced stark contrasts across the European and US regions. While the US market continued to grapple with seasonal destocking activities, the European market, particularly in Belgium and Germany, defied expectations with a surprising recovery in 2-EH prices. Despite these fluctuations, both regions struggled with sluggish demand, as the construction sector, in particular, continued to underperform.
In the US market, 2-EH import prices remained under pressure, yet signs of stability emerged as high freight charges due to severe port congestion in East Asia persisted. The situation was further complicated by challenges in the Chinese market, where the expected new 2-EH production capacities had failed to materialize. Wanhua Chemical and Satellite Chemical were the only major 2-EH producers to maintain stable outputs of 400,000 tonnes/year and 250,000 tonnes/year, respectively, while new facilities faced ongoing operational setbacks. Compounding this challenge, the Taiwanese giant Nan Ya Plastics, with a capacity of 220,000 tonnes per year, went offline for maintenance in mid-December 2024, leaving 2-EH production uncertain. This squeeze on supply was exacerbated by a 17% surge in freight charges from Far East Asia to the US East Coast, pushing 2-EH import prices, making them uncompetitive through the first half of December 2024.
Export 2-EH prices also saw a dip of approximately 2% as US suppliers, faced with inventory overhang, struggled to move large volumes amidst logistical uncertainties and a looming strike threat in January 2025. The Association of American Railroads reported a 2.2% drop in chemical railcar loadings in mid-December, resulting in an oversupply of 2-EH in the market. Sluggish consumption in key sectors like plasticizers and paints further weighed down the 2-EH market, while housing starts fell by 1.8% in November, despite a 6% rise in building permits.
In a notable divergence, the European market, especially in Belgium and Germany, showed signs of recovery after 2-EH prices were assessed at historically low levels earlier in the year. 2-EH prices in these regions rose by around 1% as suppliers began to pass on higher feedstock costs—specifically Propylene, which saw a 1.7% increase in late December 2024. The rebound in 2-EH prices was driven by European suppliers unwillingness to negotiate further on already low prices. Despite ample 2-EH supplies in the market, imports from Asia remained uncompetitive due to the closed arbitrage window, and the continued operational issues faced by Asian 2-EH producers like Nan Ya Plastics exacerbated the supply crunch. Furthermore, high freight charges, which rose by 2.5% in the first half of December, placed additional upward pressure on 2-EH prices.
What stands out in the European market, particularly in Germany, is the stark decline in construction sector activity, which continued to weigh heavily on the 2-EH market situation. German construction has been in a downturn for much of 2024, as reflected in a sharp 19.3% drop in dwelling permits issued during the first ten months of the year, with only 141,915 units authorized compared to the previous year. Despite this, the recovery in 2-EH prices across Belgium and Germany suggests that local production is stepping in to fill the void left by constrained Asian imports. Suppliers turned to the domestic 2-EH market, where local producers offered more competitive pricing due to the weakening of the Asian supply chain, which helped stabilize 2-EH prices somewhat.
On the global stage, China’s competitiveness in the 2-EH market has significantly declined, with export volumes of 2-EH from China plummeting by approximately 75% in November 2024. Orders for 2-EH remained low, and major Chinese 2-EH producers, including Anqing Shuguang, Petrochina Northeast Company, and Qilu Petrochemical, revised their prices downward, reflecting a difficult 2-EH market environment, having revised prices downward Fin the rage of Yuan 100/MT to Yuan 200/MT for deliveries scheduled from December 15, 2024, despite operational rates being down by 1% across the Shandong Province
Looking forward, expectations are that 2-EH prices across the global market will see an upward trend, driven by rising feedstock costs—specifically Propylene, which is expected to increase. Major US 2-EH producers, such as Eastman Chemicals and Dow Chemicals, and European 2-EH producers like INEOS Oxide and OQ Chemicals, are also anticipated to adjust their prices in the early days of 2025. Additionally, planned maintenance turnarounds during the holiday season are likely to cause production outages, especially in Europe, further tightening 2-EH supply and contributing to higher prices.
The situation in Asia remains fraught with uncertainty as new 2-EH production facilities struggle with operational issues, and Nan Ya Plastics continues its offline status. These challenges add another layer of complexity to the global 2-EH market, keeping industry players on edge as they navigate a turbulent year-end and prepare for what’s ahead in 2025. |
