China Butadiene Market to Face Upswing in May
Snapshot: In April, China’s butadiene market price fell back from highs and then trended sideways till mid-May. Propped by the export of Chinese-made butadiene resources, the market price of butadiene began to rebound from mid-May. In the coming days, players adopt a bullish sentiment toward the butadiene market.
In April, China’s butadiene market price dented from highs and then moved sideways.
In April, China’s butadiene market price slid from a high level and then trended sideways till mid-May. From April, the highest market price of butadiene was RMB 10,950/mt in early April, whilst the lowest one was RMB 9,400/mt around May 10. From April 2022, the market price of butadiene was higher than that in the same period last year. However, according to the average price fluctuation of butadiene in the past ten years, the overall market price of butadiene has been relatively low since 2022, which has not reached the average price level in the past ten years.
In early April, as some downstream industries cut production amid high cost pressure or took routine maintenance, the high price of butadiene plunged. In mid-April, the northeast producer planned to take turnarounds of the butadiene unit. Some downstream units were expected to be restarted in late April. The market price of butadiene halted dipping. From late April to early May, the market price of butadiene saw small-ranged movements. Lackluster end demand dragged down players’ sentiment.
In April, the consumption volume of butadiene pared down notably.
According to SCI, the consumption volume of butadiene in April reached 301.4kt, down 13.6% from March. The butadiene consumption crashed due to the following aspects. On the one hand, in March, the market price of butadiene surged to a relatively high level, so most downstream industries faced high cost pressure. Some downstream enterprises cut the operating rates curbed by cost pressure and demand, especially in the SBS and PBR industries. On the other hand, some downstream units took routine maintenance. In April, some ABS units were shut down for maintenance, so the consumption volume of butadiene trended down notably. The demand lent ebbing support to the market, so the butadiene price went lower.
In April, the butadiene supply saw cutbacks, lending certain support to the butadiene price.
In April, China’s butadiene supply remained in a downswing. According to SCI, the butadiene output in China reached 323.8kt, down 2.4% M-O-M. It was mainly because a total of 590kt/a butadiene units were shut down for maintenance this month. Besides, affected by the cost, some crackers lowered their operating rates. Although two butene ODH units at Jiutai Energy Inner Mongolia and Nanjing Chengzhi Yongqing Energy Technology ran normally, the losses under maintenance were higher from March. Thus, the overall butadiene output still showed some curtailment from last month. The supply still lent certain support to the butadiene price, and it began to be range-bound after falling back.
China’s butadiene market is expected to rally in May, bolstered by favorable fundamentals and export market.
As seen from domestic downstream industries, in mid-to-late May, some shut downstream units are likely to be restarted in succession, so the consumption volume of butadiene may ramp up due to the rigid demand. Especially, the butadiene consumption from PBR and ABS sectors will level up notably, lending stronger support to the butadiene price M-O-M. It is projected that the consumption volume of butadiene in May will climb by around 12% from April. As seen from the supply, Shandong Wintter Chemical and Nanjing Chengzhi Yongqing Energy Technology will shut down their butadiene units in mid-May, so the butadiene supply is expected to pare down. Easing supply pressure will lend certain support to the butadiene price.
As seen from the export, in mid-to-late May, some Chinese-made butadiene resources will be exported, driving up the domestic butadiene market. SCI reckons that more than 10kt of Chinese-made butadiene will be exported in May, and the export volume will reach around 6kt in June. Recently, as the main products of ethylene crackers face thin profits, the overall operating rate of crackers in Japan and South Korea is affected. Thus, there will be a certain demand for spot butadiene in Japan and South Korea from May to June. Against the backdrop of constant exports, the supply pressure on China’s domestic market will be eased, which will bolster domestic butadiene price to some extent.
To sum up, China’s butadiene market price is projected to gain ground in mid-to-late May. The butadiene supply and demand fundamentals will warm up from April. Besides, the export of Chinese-made of butadiene will bolster the market. In June, the new 70kt/a butadiene unit at Zhejiang Satellite Petrochemical is projected to come on stream. Yet, at the beginning of start-up, only half of the new capacity may be released, limitedly replenishing China’s butadiene supply. Meanwhile, the 200kt/a adiponitrile unit at Tianchen Qixiang New Materials will be conducted a trial run. On the whole, the increment in demand will be higher than that in supply. Thus, it is estimated that China’s butadiene market price may head up in the coming days.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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