China Butadiene Price Stays High on Supply Crunch
Snapshot: In November, China’s butadiene market trended at highs, mainly underpinned by tight spot supply. Prices of downstream products whittled down, having a limited impact on the butadiene price. The overall butadiene market in China remained firm in November.
From November, China’s butadiene market price trended at highs. In early November, the butadiene price in the Jiangsu-Zhejiang market was RMB 9,475/mt but it dropped to RMB 9,200/mt on November 10, only down 3%. As seen from downstream products, the PBR and SBR prices slid by 3.25% and 3.64% respectively, higher than the decrement in butadiene price. The price decrement of other downstream products remained minor, but they still faced high cost pressure. In November, the spot supply of butadiene was limited. Producers with available resources maintained the butadiene price at a high level, underpinning the overall market.
Low spot availability bolstered the butadiene price.
In November, the Asian butadiene market price remained relatively high. Besides, a butadiene unit in the Middle East took maintenance, so the replenishment to China’s butadiene market was curtailed. The strong USD market underpinned China’s butadiene price to some extent. Besides, in October, two butadiene units in East China were shut down unexpectedly. Therefore, the spot supply of butadiene was tight, hardly replenishing the northern market. Accordingly, the overall butadiene price stayed high. In terms of the northern market, some butadiene resources were exported in October, leading to tight spot supply. Due to unit hiccups in the northeast region, its butadiene market also faced a supply crunch. In Shandong, a butadiene unit was expected to be shut down, driving up the overall trading atmosphere.
The butadiene price hardly slipped on rigid demand.
In October and November, China’s butadiene market price kept high. The profitability at the major downstream sectors was squeezed greatly. From end-October, the synthetic rubber industry lingered at the break-even line, with minor losses mostly. The profit loss reached RMB 500/mt. Besides, the overall operating rate of the synthetic rubber sector remained at a relatively high level in 2023, in the wake of the restart of long-term shut units. Thus, rigid demand still posted strong support for the butadiene price. Other downstream enterprises cut loads slightly, but there was still certain demand for butadiene to maintain normal operation.
In the coming days, China’s butadiene market is likely to remain high. The spot supply of butadiene may hardly be replenished in the short run. Northern producers with available resources may have limited spots. Besides, Shandong Shouguang Luqing Petrochemical plans to shut down its butadiene unit on November 12. Therefore, the spot supply of butadiene may continue to pare down. In East China, some imported shiploads arrive at ports, but most of the resources have been sold to some downstream users, so the tradable volume may be limited. In the short run, the supply may lend certain support to the butadiene price. Players should pay attention to the profit losses and load change status of downstream industries.
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