The French Butyric Acid market is facing a period of fragile stability, with prices holding steady despite ongoing production challenges. A notable price hike of €80/MT by OQ Chemicals, effective January 1, 2025, has provided some support, but Butyric Acid production remains limited. Factory closures for the holiday season have kept production low, with full recovery expected only by mid-January 2025.

Despite low production levels, supplies of Butyric Acid in the inland market have remained sufficient, thanks to the closure of the arbitrage window for imports and exports. However, this has not led to significant price increases, as demand for Butyric Acid remains on the lower side. Some market players remain cautiously optimistic about restocking inventories, but trading activity remains subdued. Port congestion, particularly at key Northwestern European ports like Hamburg and Antwerp, has added further strain to the Butyric Acid supply chain, with yard utilization in Antwerp at 80% and in Hamburg at 75%-80%, leading to delays in loading and unloading.

The food and flavoring sector, as well as the industrial chemical production sector, have been slow to recover, with ongoing holiday periods restricting procurement. For the French Butyric Acid market, the price hike by OQ Chemicals has been somewhat supportive, but production levels have remained low. Normal production levels are not expected until mid-January 2025, and until then, the Butyric Acid market will remain tight.

Despite these challenges, Butyric Acid supplies in Europe have not yet seen a dramatic shortage. However, inland congestion and delays at critical terminals are affecting the flow of Butyric Acid across the region. High yard utilization rates, up to 80% at Antwerp and 75%-80% at Hamburg, continue to cause disruptions. This week's price stability has been attributed to producers attempting to pass on the higher costs of feedstock propylene to customers. With the bearish market conditions that have persisted since Q4 2024, suppliers are largely unwilling to lower prices any further, keeping Butyric Acid prices stable for now.

The animal feed sector across Europe, while under pressure, is showing signs of stabilization compared to the previous year. Modest recovery is expected in Ireland (+3%), Spain (+5%), and Poland (+1.9%). However, the European Butyric Acid market faces continued challenges, particularly from a decline in pig populations caused by African Swine Fever (ASF) and economic pressures across the EU27. Countries such as Germany, Belgium, and the Netherlands are facing regulatory pressures to reduce farm emissions, which has created uncertainty and negatively impacted Butyric Acid demand.

In the chemical intermediate sector, French manufacturers are continuing to struggle with fragile sales conditions, low client interest, and declining export demand. Overseas business saw a contraction in December, marking the continuation of a downward trend that has lasted nearly three years. French manufacturers have responded by cutting back production, extending a period of declining output that has lasted more than two and a half years, further suppressing Butyric Acid sales.

Looking ahead, Butyric Acid prices in Europe are expected to rise. Suppliers are unlikely to lower prices further, and restocking activities are anticipated, especially with low production expected to continue through mid-January 2025. The price hike initiated by OQ Chemicals may also prompt panic buying, as customers rush to secure Butyric Acid before the revised prices take effect. This could result in higher prices across the market throughout January 2025, marking a significant shift in the European Butyric Acid market.