Butadiene: Prices Plunge 15.73% amid Escalating Sino-U.S. Tariff Tensions
Introduction: This week, amid escalating Sino-U.S. tariff tensions, the butadiene price in China plunged by up to 15.73%. Although the U.S. announcement of a 90-day tariff suspension on certain countries, which triggered a rebound in future prices, the overall market atmosphere remained weak. Thus, butadiene prices faced pressure again. Ample supply coupled with weak demand is expected to keep butadiene prices fluctuating weakly, and attention should be paid to macro factors.
Background:
On April 3, the U.S. announced its reciprocal tariffs policy, imposing a 10% baseline tariff on all trading partners (effective April 5), and tiered surcharges on select countries, including China (+34%, effective April 9). Combined with existing duties, the total tariff rate on Chinese goods was 54%.
On April 4, China announced retaliatory tariffs, imposing an additional 34% duty on all U.S.-origin imports, based on existing rates.
On April 8, the U.S. escalated tensions by raising its “reciprocal tariffs” on Chinese goods from 34% to 84%, as a direct response to Beijing’s countermeasures.
On April 9, China's Customs Tariff Commission responded with Notice No. 4 (2025), announcing it would raise retaliatory tariffs on U.S.-origin imports from 34% to 84%, effective 12:01 PM on April 10, 2025.
On April 9, Trump announced a 90-day tariff suspension for countries/regions refraining from retaliatory measures, during which the “reciprocal tariff” rate would be reduced to 10%. Meanwhile, he declared an increase in additional tariffs on Chinese goods to 125%, bringing the total tariff to 145%.
On April 11, China announced it would raise tariffs on U.S.-origin imports to 125%, matching Washington's latest escalation. Officials stated: "At current tariff levels, American goods already face zero market viability in China. If the U.S. imposes further tariffs, China will disregard such measures."
Crude oil and PBR futures rebound after sustained declines
The U.S. imposed global base tariffs and country-specified additional tariffs, sparking market concerns about an economic recession. Stock markets in multiple countries declined simultaneously. During the public holiday, WTI crude oil prices experienced a continuous decline over four consecutive trading days, with a cumulative drop of 12.13/bbl or 16.92%. The Brent also went down cumulatively by $12.13/bbl or 16.18%, reaching a four-year low. After the public holiday, China's synthetic rubber futures saw cumulative losses exceeding 2,600 points. However, the U.S. announced a 90-day tariff suspension for countries or regions not implementing retaliatory measures, while reducing reciprocal tariffs to 10% during this period. This news triggered a slight rebound in crude oil prices, recovering about half of the recent losses. China's synthetic rubber futures prices also stabilized and showed modest rebounds.
The market price of butadiene declined up to 15.73% this week
From the perspective of China’s butadiene, the proportion of U.S.-related import/export volumes remains relatively insignificant (For details, please refer to “Influence of Escalating Sino-U.S. Tariffs on China Butadiene Industry”, https://intl.sci99.com/n/4/645488.html). However, as the U.S.-China trade dispute escalated, the prices of upstream crude oil and downstream PBR futures experienced significant declines, which resulted in a downward trend in the butadiene market as well. Taking the Jiangsu-Zhejiang market as an example, as of April 11, the closing market price was RMB 9,375/mt. Compared with the last trading day before the Qingming Festival, the price fell by RMB 1,750/mt, a decline of 15.73%. In terms of representative enterprise prices, the butadiene price at Sinopec in East China was adjusted downward from RMB 11,200/mt before the holiday to RMB 10,000/mt.
Although the U.S. announced a 90-day tariff suspension for certain countries and regions, the favorable factors prompted rebounds in relevant futures markets, and some enterprises engaged in essential purchasing, the overall market sentiment remained weak, and butadiene prices declined again after a brief rebound.
Short-term Forecast: Butadiene Market Prices May Continue to fluctuate weakly
From a macroeconomic perspective, the uncertainty of the US tariff policy may trigger an increase in market risk aversion sentiment, leading to widespread pressure on commodities. As a key feedstock in the petrochemical industry chain, butadiene prices are correlated with crude oil, synthetic rubber, natural rubber, and other related products. Close attention should be paid to macroeconomic developments for further price direction.
From a fundamental perspective, in terms of supply, most producers with resources flowing to the market maintain normal operations. New units in South China are running smoothly. Additionally, some imported goods successively arrived at the port recently, and the maintenance at Hengli Petrochemical was postponed. These factors may contribute to relatively ample spot supply, thereby exerting downward pressure on butadiene prices. Moreover, as a byproduct of ethylene cracking, butadiene supply is directly influenced by refinery operating rates. If the price of crude oil is weak, leading to an increase in cracking profits, then the refinery operating rate may further increase, thus exacerbating the situation of oversupply.
In terms of demand, the impact of tariffs on some glove producers is expected to gradually become evident. The reduction in end-use orders may lead to production cuts or even shutdowns at some latex producers. The tire industry may face the dual pressures of a slow growth rate of domestic demand and trade barriers for external demand, leaving little space for a meaningful recovery in synthetic rubber demand. Overall, the downstream demand volume is likely to decline, and its supporting effect on the price of butadiene may be limited.
Butadiene prices fell to relatively low levels, leaving limited room for further declines in the near term. However, under ample supply and weak demand, there is insufficient momentum for a rebound. It is expected that the price of butadiene may show a weak and fluctuating trend in the short term. The butadiene price in the Jiangsu-Zhejiang market may be RMB 9,200-9,800/mt. It is necessary to pay cautious attention to the further impact of macroeconomic factors on the market price.
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