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2019 China Butadiene Market Forecast

SCI99

2019-02-22

2019 China Butadiene Market Forecast

China’s butadiene market price saw sharp ups and downs in 2017. Yet, in 2018, after new butadiene capacity was released, China’s butadiene market remained largely flat.

In 2018, China’s butadiene market reflected some new characteristics. The fluctuating range of butadiene price shrank. The butadiene unit took turnarounds intensively during the maintenance season. Yet, there were also butadiene resources exporting to other countries. The export volume of butadiene hit a five-year high. The synthetic rubber enterprises suffered obvious losses while butadiene prices also fluctuated at a high level. China’s butadiene supply continued to rally while the demand from downstream industries declined.

Butadiene supply will further climb in 2019.

As seen from the supply side, in 2019, a total of 370kt/a new butadiene units at Jiutai Energy Inner Mongolia, Zhejiang Petrochemical and Nanjing Chengzhi Yongqing Energy Technology will go into production in H1, 2019. At that time, China’s total butadiene capacity will reach 4,259kt/a. As seen from the unit maintenance in 2019, only the butadiene units at PetroChina Lanzhou Petrochemical and PetroChina Dushanzi Petrochemical will take overhauls in Q2 and Q3, 2019. These two butadiene units both belong to upstream and downstream integration units, having slight impacts on the butadiene market. Therefore, China’s butadiene supply will be relatively sufficient due to more new butadiene units and less unit maintenance.

If the above new butadiene units are put into operation as scheduled, China’s butadiene capacity will reach around 4,259kt/a in 2019, up 7.58% Y-O-Y. As seen from the enterprise nature, most new butadiene units belong to private enterprises. The butadiene capacity proportion in Sinopec and PetroChina will decline somewhat. As seen from the capacity layout, the butadiene capacity in East China will further rally. The capacity of butene ODH units will go up further as there will be some butene ODH capacity in the newly added capacity.

With China’s butadiene supply increasing, the import volume of butadiene will continue to drop. Thus, the import dependence degree of butadiene will decline constantly.

The butadiene demand will remain in an uptrend in 2019.

In 2019, there will be new butadiene units going into production in China. The newly added capacity will be mainly in SSBR industry, SBS industry, ABS industry and SEBS industry and may increase more in the future, but the newly added capacity will be limited in SBR industry, PBR industry, NBR industry and the rubber latex industry. There will be many new units in SSBR and SEBS industries due to the good profits.

If the new units of SBS, ABS, SSBR, ESBR, etc. can be put into operation as scheduled, it is predicted that China’s butadiene consumption volume will be around 3,050kt in 2019, up 4% Y-O-Y. Although there was no new unit going into production in SBR industry and PBR industry in 2018, the synthetic rubber output went down somewhat restricted by low operating rate at China’s producers and the high cost. The butadiene prices may decrease as China’s butadiene supply becomes sufficient gradually. Additionally, maintenance of downstream units may decrease somewhat, so the demand for butadiene will improve. Moreover, some newly added capacity will be released, which will increase the consumption volume of butadiene. Overall, China’s butadiene consumption volume will show an uptrend in 2019.

As seen from China’s butadiene supply and demand in 2019, the growth rate of supply will be slightly higher than that of demand in China’s butadiene market. The import dependence degree of butadiene will decline constantly. And there will be some butadiene resources for export when the price spread between China’s butadiene price and import price is rational. In Q2, 2019, the butadiene units will take turnarounds intensively, which will probably bolster China’s butadiene market price. Besides, newly added butadiene capacity will be released in H2, 2019. Thus, SCI reckons that China’s butadiene prices will remain in a downtrend overall in 2019. The butadiene price in H1, 2019 will be higher than that in H2, 2019.