Operating rate of BDO plants descends again with increasing turnaround

Operating rate of BDO plants slightly recovered in Jul, mainly around 65-70%. Demand for BDO was stable. Downstream buyers showed strong buying interest in expectation of expanding capacity and most downstream factories had low inventory. Price of spot BDO inched down due to slower sales but the decrement was slow, with reduction at around 4.8% in the first half of Jul.

Demand for BDO was largely stable in the first half of Jul and supply slightly increased after many units restarted from turnaround. Coupled with cautious downstream restocking, price of BDO slowly decreased.

Some BDO plants are scheduled to have turnaround in Aug. Therefore, the operating rate of BDO plants will reduce. The bullish support from supply side may be continued into Aug and price of spot BDO slightly moved up driven by the bullish supply.

The above assessment is based on the combined capacity of units with production suspension plan and the plants who have started turnaround, while the capacity loss caused by low run rate in some factories is not included. More BDO plants will start maintenance from end-Jul and the production suspension peak is expected to appear in the first half of Aug. Blue Ridge Tunhe will halt production for one month from end-Jul for scheduled turnaround, which will end up with greatly falling supply. Dongyuan Technology will also suspend production for 10 days. The total production suspension of Blue Ridge Tunhe and Dongyuan Technology is at 580kt. In addition, Yanchang Petroleum and Sinopec Great Wall will also shut down for the change of catalyst for a short period. Supply has not recovered in Markor and Tianye. Supply of BDO is still expected to drop.

More than 1 million tons/year of capacity is expected to be suspended in the first half of Aug in expectation of production suspension peak. Coupled with the supply loss caused by low operating rate in some companies, the average operating rate of BDO plants is anticipated to reduce to around 65% in Aug, close to the level in Jun.