Probing into China Butadiene Market Price Rebound
Snapshot: In end-June, China’s butadiene market price saw a minor rebound. Closing to end-June, the spot supply at northern producers with merchantable resources pared down, and low-priced butadiene resources were limited in the market. Thus, the supply slightly underpinned the butadiene price. The market price of butadiene edged up. In July, China’s butadiene market price may perk up, but its increment may be limited.
The market price of butadiene rebounded slightly after trending sideways recently.
From May, China’s butadiene market price remained in a downswing till late June, hitting a new low in H1, 2023. In early May, the butadiene price in the Jiangsu-Zhejiang market was RMB 8,875/mt and dropped to RMB 5,900/mt in mid-to-late June, down 34%. With the butadiene price sliding to a low level, the profitability of major downstream sectors improved and the overall downstream operating rate was fairish. In end-June, underpinned by the spot supply crunch, the butadiene market price rebounded slightly. As of July 4, the delivered price of butadiene in the Jiangsu-Zhejiang market was RMB 6,650/mt, up 12.71% from mid-to-late June.
China’s butadiene output swung down in June, bolstering the market price.
According to SCI, in June, China’s butadiene output reached 349kt roughly, which stood at a relatively low level in 2023. In June, China’s butadiene units took maintenance intensively, covering units at Zhejiang Petroleum & Chemical, PetroChina Daqing Petrochemical, PetroChina Lanzhou Petrochemical, etc. Besides, some butadiene units were shut down beyond the schedule, and parts of enterprises cut the operating rate. In East China, a butadiene unit was postponed to be restarted. Thus, the butadiene output tapered down. Moreover, due to weather factors in East China, the arrival time of imported shiploads was delayed. In the import market, no lower dealing was heard concluded. Therefore, traders were reluctant to sell at lows, buttressing the butadiene market to some extent.
The demand for butadiene advanced recently, due to passable profits at some downstream sectors.
According to SCI, in June, the downstream consumption volume of butadiene rallied to 358.9kt. The demand for butadiene warmed up M-O-M, especially in PBR and SBR sectors. In late June, with the butadiene price falling to a low level, major downstream sectors uplifted the operating rate due to the profit gains. The negotiable price of butadiene floated up, backed by a demand rise.
In the short run, the average price of butadiene may trend up.
In the short run, the spot supply in the northern market may be sparse. Besides, a butadiene unit is scheduled to take maintenance, propping up the market price somewhat. Yet, in the coming days, some imported shiploads may arrive at East China port in succession, and there will be some imported resources available in the market. Thus, China’s butadiene market will be replenished, subduing the increment in price. In terms of demand, at present, the operating rate of the downstream industry may hardly head up further. With the butadiene price rising, the profit at downstream enterprises may be squeezed, failing to bolster the price from the demand.
On the whole, it is projected that the average price of butadiene may inch up in July. Despite expected unit maintenance, the arrival of imported shiploads may curb the increment in butadiene price. If the butadiene keeps rising, downstream users will hardly hold loads high. Thus, the demand may fail to underpin the butadiene price. Players should pay attention to the negotiation on imported shiploads and their impacts on China’s butadiene market price.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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