Global 2-EHN Market Slumps Amidst Declining Raw Material Prices and Dwindling Downstream Demand

The global 2-Ethylhexyl Nitrate (2-EHN) market experienced a significant price drop in August 2024, influenced by a number of factors. One of the main reasons behind this price drop is the continued decline in the price of crude oil, which is crucial for the production of 2-EHN. Declining crude oil prices will suppress 2-EHN prices and create a more favourable investment environment for manufacturers. In addition, the market saw a narrowing of the gap between demand and supply, which also contributed to a decline in the overall price. During this period, the demand for 2-EHN was uneven, mainly due to the weak performance of the end-use sectors, especially the automotive industry.

In the North American region, the 2-EHN market faced a significant price decline of USD 80/MT during August, primarily attributed to weakened demand and surplus inventories. One of the key drivers behind this downturn was inconsistent demand from the automotive sector, a major consumer of 2-EHN for its fuel additive applications. Light vehicle sales experienced a 4.5% month-on-month (m/m) decline, falling to an annualized rate of 15.1 million units, underperforming expectations of 15.4 million units. The drop in sales was largely due to elevated financing costs, which suppressed consumer purchasing power and created additional pressure on vehicle demand.  Despite a modest 0.5% year-on-year (y/y) rise in passenger vehicle sales, it was insufficient to offset the overall sluggish performance of the automotive sector. This downturn, coupled with slower growth in other end-use sectors, such as construction, contributed to a broader decline in 2-EHN consumption. The construction sector, another vital industry for 2-EHN, also showed lackluster demand, further exacerbating the downward trend in sales.

On the supply side, the North American market faced an ample production of 2-EHN, leading to a surplus of raw materials. Domestic production levels remained stable, and despite some logistical challenges, the flow of cargo continued relatively smoothly. However, the combination of weakened demand and steady production resulted in stockpiling of inventories.

In like manner, the prices declined in the Asian market with India being the most affected region. The price slump was further influenced by a narrowing supply-demand gap, with ample inventories of both domestically produced and imported 2-EHN available in the market. After dockworkers reached an agreement and called off their strike, the flow of cargo, particularly from key exporting countries like China, remained uninterrupted, preventing any significant disruption in supply chains. Additionally, demand from the automotive sector, a prominent end-user of 2-EHN, remained low as the industry struggled with weak performance. Data released by the Federation of Automobiles Dealers Association (FADA) indicates that August was a disappointing month for the automotive market with passenger sales declining by 4.5% on a y-o-y basis. Market participants reported that retail sales of electric cars and SUVs in August 2024 reached their lowest levels in eight months, reflecting weak market performance.

ChemAnalyst analysis shows that the 2-EHN market will grow in the coming months, due to seasonal increases in demand and low inventory levels amidst persistent trade uncertainties and geopolitical tensions in the global market.