China Butadiene Market Levels Up on Supply Crunch
Snapshot: In Q4, 2023, China’s butadiene market trended at highs, and the quarterly average price continued to pick up from Q3. Bolstered by robust supply, the market price of butadiene fluctuated upwards from October to November. As prices of downstream products moved up limitedly, the high price of butadiene pared back somewhat in December. Yet, in December, due to unexpected units’ shutdown, the butadiene supply tightened, leading to a surge in price in H2 December. In Q1, 2024, with the cutdown of deep-sea cargoes, the supply will still underpin the market price of butadiene.
In Q4, 2023, the market price of butadiene first perked up and then fell, but the quarterly average price continued to advance from Q3.
In Q4, 2023, the market price of butadiene first perked up and then fell, but the quarterly average price continued to advance from Q3. According to SCI, in Q4, the average price of butadiene in the Jiangsu-Zhejiang market was RMB 8,953/mt, up 17.6% Q-O-Q and 26.2% Y-O-Y. The market price of butadiene lingered at RMB 7,950-9,800/mt in Q4, with the highest and lowest prices on November 23 and December 15 respectively. The overall butadiene market fluctuated at highs, based on the following reasons. Firstly, China’s butadiene supply remained at a low level, stemming from unexpected units’ shutdown. Secondly, foreign butadiene supply dwindled, leading to relatively high prices. Therefore, the import volume of butadiene declined whilst the export volume ramped up, giving certain support to the butadiene market in Q4. In H1 December, the market price of butadiene trended down. Due to relatively high-cost pressure, some downstream enterprises cut or halted production, dragging down the butadiene price from the demand. However, in H2 December, some of China’s butadiene units were shut down unexpectedly, pushing up the market price.
China’s butadiene supply stayed low, due to unexpected units’ shutdown.
In Q4, China’s butadiene output reached 1,116kt, down 0.14% Q-O-Q. Yet, the overall output was still at a low level. Despite fewer scheduled unit maintenance in China, some butadiene and crackers were shut down unexpectedly, greatly affecting the butadiene supply. In Q4, some butadiene units faced hiccups in various periods including Fujian Refining & Petrochemical, Sinopec Zhenhai Refining & Chemical, Shandong Shouguang Luqing Petrochemical, Shandong Wintter Chemical, Wanhua Chemical Group, Sinopec Zhongke (Guangdong) Refinery, Shanghai Secco Petrochemical, BASF-YPC, Zhejiang Petroleum & Chemical, Sinopec Qilu Company, Liaoning Bora Petrochemical, etc. Therefore, China’s butadiene output was influenced in different periods. Meanwhile, the trading atmosphere warmed up notably, stemming from the unexpected unit shutdown. Especially in late December, the butadiene unit at Sinopec Qilu Company was shut down by chance. The butadiene price hit the largest increment in a single day on December 25. Robust supply strongly pushed up the butadiene price.
Limited imported resources bolstered China’s butadiene market.
In Q4, the import volume of butadiene reached around 100kt, down 36% from Q3. From mid-September, affected by load cut of foreign units and delay of deep-sea cargoes, Asian butadiene market price trended up greatly. Thereafter, as the butadiene unit at PRefchem was shut down unexpectedly again, available off-shore resources dwindled as well. Thus, the supply strongly underpinned the USD price. On the whole, in Q4, without many imported shiploads replenished, the inventory at East China port remained relatively low. Coupled with low domestic output, the supply greatly propped up the butadiene price in Q4.
Downstream demand dragged down the butadiene price limitedly.
In Q4, the consumption volume of butadiene in China stood at around 1,180kt, up 1.7% from Q3. The rigid demand gave certain support to the butadiene price. Especially in November, with downstream cost pressure rising, some enterprises halted production or cut loads, weighing on the butadiene price. Especially private PBR, SBS and ABS enterprises, the operating rate of the above industries declined notably from November. The butadiene price saw some declines amid sparse dealings concluded at high prices.
In Q1, 2024, the market price of butadiene may stay firm, bolstered by robust supply.
As seen from the seasonal fluctuation characteristics, the butadiene price is likely to move up in Q1, especially in January and February. Affected by downstream stock-up activities ahead of the Spring Festival, the butadiene price usually picks up. In Q1, 2024, the overall butadiene market price may follow the fluctuation characteristics.
In terms of supply, there are still maintenance plans for some domestic butadiene units in the next three months, and the restart time of some shutdown units has not yet been determined. In Q1, 2024, no new butadiene units are scheduled to kick off, so the supply of Chinese-made butadiene may hardly improve. In terms of imports, recently, negotiations on deep-sea cargoes have been limited, due to transportation cost and cycle issues. Off-shore butadiene resources are sparse as well. Besides, some downstream enterprises in South Korea and China’s Taiwan need to purchase spot butadiene. Therefore, the Asian butadiene market remains high. China’s downstream users mainly stay on the sidelines and show thin appetites for high-priced butadiene. The imported butadiene resources may hardly replenish China’s domestic market.
In terms of demand, with the curtailed supplement of deep-sea cargoes, some Chinese-made butadiene resources are likely to be exported in January and February, buttressing China’s domestic market. In China, affected by the Spring Festival holiday in February, the operating rate of downstream industries may level down. Yet, in March, downstream users may need to purchase butadiene in the wake of resuming production, which may support the butadiene price to some extent.
On the whole, the overall market price of butadiene may trend at highs in Q1, 2024, backed by fairish fundamentals.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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