China Butadiene Market to Stay Robust After Rising in Jul
Snapshot: In July, China’s butadiene market price fluctuated upwards, and the average price went higher from June. China’s butadiene units faced hiccups unexpectedly and the restart of some shut units was delayed, underpinning the butadiene market to some extent. In the later period, with units’ maintenance ending, the butadiene supply is expected to perk up. Yet, the consumption volume of butadiene may climb as well, in tandem with resuming end demand.
In July, the market price of butadiene in China trended up.
With the butadiene price hitting the bottom in late June, some downstream users showed active production enthusiasm. The spot supply of butadiene dented in the market. Therefore, the market price of butadiene advanced. Despite intensive arrival of imported shiploads at East China port, the butadiene market price fell back slightly in early July. However, the restart of some shut butadiene units was not smooth. Besides, two butadiene units were shut down beyond plans, pulling up the overall trading atmosphere. Meanwhile, Liaoning Bora Petrochemical planned to take maintenance of its butadiene unit in August, and its matched downstream unit needed to purchase butadiene from the market. Boosted by the above factors, the butadiene market price headed up in July. As of July 25, the butadiene price in the Shandong market was RMB 7,450/mt, up 7.6% from early July.
In July, the butadiene output stayed low, bolstering the market price.
In July, China’s butadiene output remained low. The butadiene output fell short of expectations, due to a delay in unit restart and unexpected units’ shutdown. According to SCI, in July, China’s butadiene output was around 350kt, which was at a relatively low level. The supply gave support to the butadiene price somewhat. In July, the butadiene units at PetroChina Lanzhou Petrochemical, PetroChina Daqing Petrochemical, Shanghai Secco Petrochemical, Gulei Petrochemical, Zibo Qixiang Tengda Chemical, Zhejiang Petroleum & Chemical Phase I and Sinopec Beijing Yanshan Company took routine maintenance. The butadiene units at Sinopec Zhongke (Guangdong) Refinery and CNOOC and Shell Petrochemicals were shut down unexpectedly. Besides, the restart of some butadiene units was delayed. Therefore, the butadiene output kept low in July. Especially in the northern region, the spot supply of butadiene was tight. Besides, Liaoning Bora Petrochemical planned to take maintenance from end-July, shoring up the butadiene price to some extent.
The consumption volume of butadiene leveled up in July.
Downstream profits extended gains after the butadiene price slid to a low level. Thus, they were more active in production. Heading into July, China’s butadiene consumption continued to rally. According to SCI, the consumption volume of butadiene in July reached 366.7kt, up 2.2% M-O-M. As seen from niche sectors, the output of SBR and PBR dropped slightly, stemming from some units’ maintenance. Yet, the butadiene consumption volume from ABS and SBS industries perked up notably, in tandem with the normal operation of new units. Therefore, rigid demand still underpinned the butadiene price amid rising consumption.
In July, boosted by favorable fundamentals, the butadiene market price trended up overall. Yet, some low-priced imported shiploads were replenished in the market, and downstream products hardly saw constant price rises, so the increment in butadiene price was curbed in July.
From August to October, China’s butadiene market may remain robust amid improving fundamentals.
In the later period, China’s butadiene supply may be relatively sufficient. With some units being restarted, the butadiene output is expected to go up. From August to October, the monthly butadiene output may be over 390kt, up around 13% compared with the average from May to July. The support from the supply may wane. Besides, imported butadiene shiploads may be ample. Against slack foreign demand, batches of imported butadiene resources may flow to China’s market for arbitrage. Therefore, the supply may fail to bolster the butadiene price in the next three months.
In terms of demand, most downstream units may finish turnarounds, and end demand is projected to recover in H2, 2023. The overall operating rate of downstream sectors may ramp up. According to the downstream production arrangement, from August to October, the monthly butadiene consumption may be 400-410kt, up 14% compared with the average from May to July. The support from the demand may be enhanced gradually.
On the whole, as seen from the supply-demand balance, from August to October, the loose butadiene supply status may be eased, and the support from fundamentals may warm up. Besides, affected by typhoon weather in summer, the arrival time of imported shiploads may be delayed periodically. Against high-temperature weather, unexpected shutdown of butadiene units may be paid attention to. In Summary, from August to October, the average market price of butadiene may move up. Yet, the increment in butadiene price may be limited against oversupply.
Remarks: The supply-demand balance from August to October refers to the forecast value.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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