Fairish Fundamentals to Underpin China BD Pirce in 2024
Snapshot: In 2023, the average market price of butadiene in China continued to dwindle from 2022. The overall market price of butadiene saw an upswing after dipping from highs. As of November 21, the butadiene price in the Jiangsu-Zhejiang market averaged RMB 8,204/mt, down 6.32% Y-O-Y. In 2024, China’s butadiene market will face a tight balance, bolstering the price from fundamentals.
In the recent five years, China’s butadiene market price remained range-bound, and the average price leveled down. The overall butadiene price lingered at RMB 4,000-12,000/mt. However, the spread between the highest and lowest prices shrank in the recent two years, with narrower fluctuations from early periods. Affected by constant increments in supply, the price of the butadiene industry chain faced headwinds in rising. In 2023, China’s butadiene market price showed a V-shaped trend. As of November 21, the average price of butadiene in the Jiangsu-Zhejiang market was RMB 8,204/mt, down 6.32% Y-O-Y. The annual high was RMB 9,900/mt in February, and the annual low was RMB 5,850/mt in June.
In Q1, 2023, the market price of butadiene remained in an upswing, affected by delayed commissioning of new units, expected unit maintenance and exports of some Chinese-made resources. And in February, the butadiene market price surged to an annual high. Yet, thereafter, the impact of unit maintenance in Q2 was enfeebled, and overseas demand recovered slowly. From May, batches of imported shiploads flowed to China’s market, greatly subduing domestic butadiene prices. Therefore, in Q2, the market price of butadiene trended down till June when it hit a yearly low. With the market price sliding, the profits of downstream industries ramped up somewhat, leading to a rise in the operating rate. The market price of butadiene perked up in Q3, in the wake of rising demand. Moreover, in September, the price of synthetic rubber futures hit a limit up after its listing, boosting the trading atmosphere in the butadiene market. In September and October, the market price of butadiene saw constant rises. However, due to tepid demand, downstream users hardly accepted high-priced butadiene. In Q4, the market price of butadiene may inch down after highs.
China’s butadiene market price is likely to first climb and then drop from 2024 to 2026, with narrow fluctuations. From 2024 to 2025, China’s butadiene supply may be relatively tight, and the import dependence degree is expected to be high. Especially in 2024, the increment in China’s supply is likely to be smaller than that in demand, because there may be limited newly added butadiene capacity. Besides, the expected recovery of end demand may prop up the butadiene price in 2024. In the coming periods, as the supply of the butadiene industry chain becomes loose, the support from fundamentals to the butadiene price is expected to weaken. Thus, butadiene is likely to trend down in the next three years.
In 2024, China’s butadiene market price is expected to see an uptick Y-O-Y. The butadiene price in H1, 2024 is estimated to be higher than that in H2, 2024. In H1, 2024, due to limited increment in new capacity and intensive unit maintenance in Q2, the supply may give strong support to the butadiene price. Thus, China’s butadiene market price may fluctuate upwards. In H2, 2024, some newly added capacity is likely to go into production in succession, and the maintenance may come to an end. The support for the butadiene price in H2 may ebb from H1. Yet, considering the constant recovery of end demand and release of new downstream capacity, the decrement in butadiene price may be minor.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
Please click "Read more" for the full article.
