China BD Price to See Limited Decrement in Short Term
Introduction: In October, China’s butadiene market price fluctuated downwards. Despite improved profits, some downstream units are expected to restart, dragging down their prices accordingly. In late October, new butadiene units are estimated to kick off. In East China, there are some resources available from traders who have made profits before. Thus, the butadiene price may trend down. However, considering the expected rise in demand, the butadiene price may see a minor decrement.
In October, China’s butadiene market price moved down. As of October 18, the delivered price of butadiene in the Shandong market reached RMB 12,975/mt, down 5.7% from early October, which was lower than the lowest price in September. After the National Day holiday, the price of PBR futures wanes notably, weighing down the trading atmosphere in the industrial chain. As seen from fundamentals, available butadiene resources at producers changed limitedly in H1 October. Besides, in East China, some imported resources arrived at East China port in succession. Thus, the supply hardly underpinned the butadiene price. In October, butadiene units at Sinopec & SK (Wuhan) Petrochemical and Fujian Refining & Petrochemical plan to take maintenance of their units, but the influence from unit maintenance emerges ahead of time. Besides, the butadiene units at PetroChina Liaoyang Petrochemical and Jiangsu Sailboat Petrochemical were shut down briefly. The PBR unit in Shandong was restarted, driving up the trading atmosphere slightly. Yet, a new butadiene unit in North China is scheduled to conduct a trial run. Some traders who made profits before sold butadiene resources in succession, with lower prices. Thus, the negotiable price of butadiene went down notably.
In the coming days, the new 150kt/a butadiene unit in North China is expected to come on stream. Imported butadiene resources concluded in the early days may arrive at East China port gradually. Besides, some traders who have made profits before are likely to sell at lower prices, dragging down the trading atmosphere in the market. Downstream users may be cautious about taking goods. However, in the short run, the capacity release of new units in North China may be limited. Besides, in Shandong, available butadiene resources may diminish. If low-priced resources in East China are exhausted, the supply may bolster the butadiene price in the short term.
As seen from the downstream sector, with the butadiene price going down, the profit of most downstream products improves. Against this backdrop, some shut downstream units are likely to restart. Especially, the consumption volume of butadiene from the PBR industry may gain ground. Thus, the demand may support the butadiene price. What’s more, in November, some ABS and ADN units in Shandong may be restarted, so the demand for butadiene may be on the rise.
On the whole, China’s butadiene supply is estimated to head up, and some low-priced resources are available. Yet, with downstream demand ramping up, the decrement in butadiene price may be limited.
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