European oxo-alcohols market turns bearish on talk of OXEA restart

New York — European oxo-alcohol prices fell Thursday on a combination of the coronavirus' effect on demand and unconfirmed talk in the market that the region's largest production site, Oxea's Oberhausen in Germany, would be returning to operation in the coming days.

S&P Global Platts assessed European spot prices for 2-EH down Eur20 on the week at Eur960/mt FD NWE, and N-butanols down Eur10 on the week at Eur840/mt FD NWE

Since the Oxea declared force majeure after a fire at its supplier of synthesis gas, Air Liquide, in February supply of oxo-alcohols has tightened significantly in Europe. This offset the coronavirus' impact on demand during March, market sources said. As a result, between end of February and end of March, spot prices for 2-EH rose by more than Eur100/mt and N-butanol price went up by Eur40/mt, according to Platts' data.

However, market sources said since the beginning of April the pandemic's impact had intensified on oxos customers due to a slowdown in the construction sector and increasing lack of staff at consumer facilities.

"The main effect on the market is from the coronavirus. Less demand from exports, from Turkey, and now Europe is also getting more impact," a source said.

"Oxea will be restarting now, and they will be aggressive, but it's a bad market to come back to. Not mind the prices, not possible to move much product at the moment," he added.

Neither Oxea nor Air Liquide were available for comment Thursday.

"Air Liquide gas unit restarted this weekend, Oxea should be also soon be ready to pump product. So the market is immediately affected. Prices went down", another source said.

In addition, sources said the main difficulty the oxo-alcohols market was facing was inability to plan ahead, with customers turning to "week-by-week" business. Market sources said the coronavirus' impact on customer behavior meant producers could not plan or predict for more than a week ahead, as every time volumes and prices had to be negotiated afresh.

"Sentiment is that everybody is waiting until after Easter, and then will decide how to move on. But, it's very hard to forecast. Everything changes quickly, very unpredictable," another source said.