China Butadiene Market Price Ticks Up in Dec
Introduction: In early-to-mid December, China’s butadiene market price fluctuated upwards, fueled by the robust PBR futures market, tight spot supply and demand recovery. It’s predicted that China’s butadiene price may fluctuate weakly in the short run. The butadiene supply is expected to move up. Amid high feedstock prices, downstream enterprises are cautious about taking goods. Besides, the operating rate of some downstream units may dwindle. Thus, the support for butadiene price may weaken from fundamentals. However, affected by the delay in unit restart, the decrement in butadiene price may be limited.
In early-to-mid December, China’s butadiene market price remained in an uptrend. Taking the Shandong market as an example, as of December 19, the market price of butadiene closed at RMB 11,175/mt, up 13.45% from end-November. As seen from the price at representative enterprises, Sinopec in East China uplifted the butadiene ex-works price to RMB 10,900/mt. Firstly, prices of natural rubber and PBR headed up, pushing up the butadiene price. Secondly, the spot supply of butadiene was tight in the market. Thirdly, the downstream operating rate was at a relatively high level, so the demand also bolstered the butadiene price.
Prices of rubber futures picked up, boosting the trading atmosphere in the butadiene market.
In early-to-mid December, prices of natural rubber futures and PBR futures picked up periodically, bolstering players’ sentiment to some extent. The trading atmosphere improved in the market. Yet, as futures price trended unsteadily, its support for butadiene price was limited.
The spot supply of butadiene remained tight in the market.
Although most producers sold resources normally, the spot volume of butadiene was limited in the market. Butadiene producers faced low sales pressure. In the northern market, after Sinopec INEOS (Tianjin) Petrochemical curtailed loads, the new butadiene unit ran at lower loads constantly. Besides, its butadiene resources were mainly supplied to downstream units at Sinopec Qilu Company. Therefore, the butadiene inflows to the market were sparse. At Weifang Port and Lianyungang Port, available butadiene resources were limited, mainly covering long-term resources. PetroChina Fushun Petrochemical didn’t plan to sell its resources in the market. Shandong Shouguang Luqing Petrochemical continued to supply butadiene resources to its downstream PBR unit. In East China, according to SCI, around 45kt of imported butadiene resources arrived at ports. Yet, it was hard to seek low-priced resources in the Asian market, with higher import costs. Thus, traders were reluctant to sell at lows. Most of the imported resources flowed to regular customers, and few flowed to the spot market, having a limited impact on the butadiene market.
Passable downstream demand shored up the butadiene price.
According to SCI, in November, China’s butadiene market price fluctuated downwards notably. On November 29, the butadiene price in the Shandong market closed at RMB 9,850/mt, down 15.45% from early November. Although most downstream markets remained weak, the decrement in butadiene price was larger. Thus, the profit of downstream industries recovered. In November, the profit of downstream sectors such as SBR, PBR, ABS and SBS remained positive. Against this background, the operating rate of most downstream industries ramped up notably. Heading into December, high loads continued and even saw periodic peaks. Thus, the demand for butadiene grew constantly. Backed by supply and demand, the market price of butadiene rebounded in December.
In the short term, the market price of butadiene may fluctuate weakly.
It's projected that China’s butadiene price may see weak fluctuation. In terms of supply, the new butadiene unit at Shandong Yulong Petrochemical is expected to run steadily, and a few resources may flow into the market constantly. This weekend, some butadiene resources may arrive at Weifang Port and East China ports. The expected rise in spot volume may weaken the support for butadiene prices. However, Sinopec & SK (Wuhan) Petrochemical continues to postpone the restart time of its butadiene unit. The decrement in butadiene price may be limited. In terms of demand, with the butadiene price climbing to a high level, the profit of most downstream sectors may narrow. Most downstream enterprises may be reluctant to accept high prices and mainly purchase when the butadiene price is lower. Within this week, several downstream enterprises cut loads, and some also plan to curtail loads, weighing on the butadiene price.
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