China Butadiene Market Swings Up Backed by Supply
Snapshot: In January, China’s butadiene market perked up after falling, and the average price continued to go higher M-O-M. The operating rate of crackers was relatively low. Some butadiene units were shut down unexpectedly. Besides, parts of Chinese-made butadiene resources were negotiated for exports, so domestic supply tightened, strongly propping up the butadiene price. In February, affected by exports of some resources, China’s butadiene producers may not face sales pressure. Thus, the market price of butadiene may remain high.
In January, China’s butadiene market perked up after dipping, and its average price continued to go higher M-O-M. In early January, available spot resources gained in the market. Therein, Gulei Petrochemical and Liaoning Bora Petrochemical sold some spot butadiene to the market, stemming from low loads of their downstream units. Boosted by that, the negotiable price of butadiene trended down rapidly. Yet, with the expected exports of some Chinese-made resources, the market price of butadiene stopped falling. In January, a total of 5 ships of butadiene resources for February were negotiated for export, driving up the trading atmosphere greatly. Besides, some shut PBR units were restarted, resulting in a crash in the spot availability of butadiene in the market. The negotiable price saw constant rises, mainly bolstered by robust supply. However, with the butadiene price climbing, downstream users were cautious about high-priced butadiene and dealings were hardly concluded.
By January 29, the butadiene price in the Jiangsu-Zhejiang market was RMB 9,600/mt, up 8.2% M-O-M and 1.6% Y-O-Y. The highest price of butadiene was RMB 9,650/mt on January 29, while the lowest one was RMB 8,550/mt on January 9.
In early January, the butadiene price dropped, stemming from rising spots.
In early January, available spot resources ramped up in the market, exerting pressure on the butadiene price. In East China, Gulei Petrochemical sold parts of butadiene to the market, as the operating rate of its downstream unit was not high. In the northern market, Liaoning Kingfa Sci & Tech cut the operating rate of its ABS unit, and the butadiene resources at Liaoning Bora Petrochemical flowed into the market, impacting the trading atmosphere greatly. In early January, players adopted a bearish sentiment to the market, in the wake of rumors that Liaoning Kingfa Sci & Tech planned to shut the ABS unit. Besides, some major downstream units remained shut, leading to a rapid decline in butadiene prices.
From mid-January, exports and unexpected unit shutdown greatly pushed up the butadiene price.
With the butadiene price dropping, some of the Chinese-made butadiene resources were negotiated for exports. Due to relatively high transportation costs, the replenishment of deep-sea cargoes dwindled in the Asian market. Some downstream enterprises in South Korea and China’s Taiwan needed to purchase spot resources, strongly bolstering Asina price. In January, batches of Chinese-made butadiene resources were negotiated for exports, alleviating domestic supply pressure. Besides, in mid-to-late January, the butadiene units at Sinopec & SK (Wuhan) Petrochemical and BASF-YPC were shut down unexpectedly, underpinning the trading atmosphere in the market. On the whole, in January, China’s butadiene supply continued to slide M-O-M. According to SCI, in January, China’s butadiene output was at a low level of 362.8kt, down 2% M-O-M.
In the next three months, China’s butadiene price may hover at highs, bolstered by robust supply.
In the next three months, China’s butadiene price is likely to fluctuate at highs.
In February, China’s butadiene output may ramp up slightly. Besides, some imported butadiene resources may arrive at East China port. Thus, the supply may fail to prop up the butadiene price. Yet, considering some butadiene resources are planned to be exported. Producers with merchantable resources may face low sales pressure. Therefore, the butadiene ex-works price may remain high. In terms of demand, affected by the Spring Festival holiday, some downstream units may take maintenance. Coupled with high butadiene prices, downstream users may show thin purchasing enthusiasm. The butadiene resources may hardly be concluded at high prices. Yet, affected by supply, it may be hard to see a drop in butadiene price. On the whole, the butadiene price may be at a high level.
In March and April, downstream enterprises may resume production in succession, slightly bolstering the butadiene price from the demand. Besides, some butadiene units are scheduled to take maintenance. Favorable supply and demand may boost the butadiene price. Yet, downstream industries may face cost pressure constantly. If some downstream units are shut down, the butadiene price may be dragged down to some extent. Players should pay close attention to the price changes of downstream products.
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