China Butadiene Market Lost Ground After Upswing
Introduction: In early January, China’s butadiene market price headed up after dropping to a relatively low level. The market price of butadiene surged by RMB 2,000/mt within a single week. Yet, this wave of price uptrend only lasted for one week. And China’s butadiene market price began to fall back this week. On the one hand, fresh butadiene capacity will be released. On the other hand, with the Spring Festival holiday drawing near, some northern downstream enterprises are expected to shut down units or cut the operating rates. In the context of weak supply and demand, China’s butadiene market underperformed.
On January 5, the butadiene price in the Shandong market averaged RMB 4,350/mt. On January 13, the butadiene price in the Shandong market averaged RMB 6,400/mt, up 47% from January 5. The butadiene price in Jiangsu and Zhejiang market rallied by 50% from January 5. China’s butadiene market saw a rapid rebound after a 2-month downtrend. The main reasons were as follows. First, more than 20kt of butadiene was exported from South Korea to the U.S. in January and February. Yet, in South Korea, the operating rate of some ethylene units was curtailed. Thus, the butadiene output will dwindle in the coming days. At present, 4kt of butadiene has been exported to South Korea. Second, a cracker in Japan was shut down for 1-2weeks unexpectedly, so there was some demand for butadiene. Driven by those factors, China’s butadiene market price stopped falling. Besides, in China, Sinopec Beijing Yanshan Company needed to purchase butadiene from the market. Thus, the spot supply of butadiene in China was tight at a moment, pushing up the butadiene market price.
Yet, from last Friday, the market price of butadiene hardly trended up. This week, the market price of butadiene began to slide. In China, the supply and demand of butadiene didn’t see obvious adjustments. Besides, the supply and demand are expected to be weak. As seen from the supply, premium-grade butadiene was available from the new units at Sinopec Zhenhai Refining & Chemical (Phase II), and its operating rate was ramping up. Sinochem Quanzhou Petrochemical plans to restart its butadiene unit this weekend.
China’s butadiene supply remained in an upswing. Besides, closing to the Spring Festival holiday, the demand is expected to ebb. From late January, some downstream units are planned to be shut down. Besides, the demand in the NBL market is relatively average. Enterprises show thin production enthusiasm, so the consumption volume of butadiene will hardly improve. The support from the demand will continue to weaken. Overall, in February, there will be few favorable factors in China’s butadiene market.
In the overseas market, the Asian butadiene market surged, due to operating rate decline in a cracker in South Korea and expected units’ maintenance in 2022. China’s butadiene market was bolstered by the Asian butadiene market. Some traders were reluctant to sell at lows. Yet, no new export orders were heard done recently. In the short run, the export will hardly lend support to China’s butadiene market.
Overall, China’s butadiene market price may head down in the short run, and players should pay attention to the stock-up activities.
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