2021 China Butadiene Market Price Saw Ups and Downs
Introduction: In the past five years, China’s butadiene market price saw sharp ups and downs. In 2017, the market price of butadiene surged to RMB 26,000/mt. After 2017, the market price of butadiene in China witnessed fluctuations. In 2020, the market price of butadiene crashed to RMB 3,300/mt, hitting a 5-year low. In other periods, the butadiene market price remained relatively stable.
In 2021, China’s butadiene market price first surged and then fell back. In H1, 2021, the market price fluctuated upwards, and it soared to a yearly high in Q3. Yet, prices of downstream products headed up limitedly. Thus, most downstream industries faced cost pressure, and the market price of butadiene began to crash. In Q4, China’s butadiene market price remained in a downswing. In 2021, the average butadiene price in Jiangsu and Zhejiang market was RMB 8,146/mt, up 30.5% Y-O-Y.
Specifically, in the first half of 2021, China’s butadiene market price saw frequent ups and downs, and in H2, it remained in a downtrend. The detailed analysis was as follows.
In Q1, downstream units were shut down unexpectedly, and the butadiene market was under supply pressure. At the beginning of Q1, the butadiene resources were relatively sufficient in the domestic market. Besides, synthetic rubber units in Jiangsu and Zhejiang market faced shutdown temporarily. The supply and demand both failed to bolster the butadiene price. Thus, the negotiable butadiene price moved down constantly. Besides, with the Spring Festival holiday drawing near, some downstream users stocked up when the butadiene price was low. What’s more, from March, China’s butadiene units began to take maintenance intensively, driving up some players’ sentiment. Besides, prices of related products went higher, strongly propping up the butadiene price. In March, China’s butadiene market price hovered at highs. Yet, as synthetic rubber units in South China saw an unexpected shutdown and some of Sinopec’s butadiene resources flowed into the market, the spot butadiene resources ramped up in the market. The supply lent ebbing support to the butadiene price. In Q1, the average butadiene price in Jiangsu and Zhejiang market reached RMB 7,558/mt, up around 9% Y-O-Y.
In Q2, China’s butadiene market price warmed up amid rising costs. In April, some butadiene units were shut down unexpectedly, and the spot butadiene pared down in the market. The supply lent certain support to the butadiene price. In May, although some shut units were restarted in succession, merchantable butadiene resources were limited. Meanwhile, the Asian butadiene market continued to remain firm. Some traders in Jiangsu and Zhejiang were reluctant to sell at lows bolstered by the cost. From June, most of the northern enterprises didn’t face notable inventory pressure. Backed by a strong Asian butadiene market, traders in East China gave priority to exporting butadiene for arbitrage. The market price of butadiene continued to surge amid limited supply. In Q2, the average butadiene price in Jiangsu and Zhejiang market was RMB 7,970.2/mt, up around 107.7% Y-O-Y.
In Q3, China’s butadiene market was dragged down by high downstream cost pressure, the release of fresh butadiene capacity and dropping Asian butadiene prices. In July, China’s butadiene market price first gained ground and then fell back. Export orders of butadiene were delivered in succession, and the release of new capacity fell short of expectations at the beginning of July. Besides, the spot supply at some enterprises shrank compared with the normal period. Thus, the supply crunch of butadiene propped up the price. Yet, from late July, with the butadiene market price soaring, downstream enterprises began to face high-cost pressure. Thus, they showed resistance to high-priced butadiene. Although several butadiene units took maintenance in August and spot supply was limited, the dealing volume was still sparse and the high price fell back notably. In September, the capacity of some new butadiene units was released, and the overall supply headed up M-O-M. Thus, the supply hardly bolstered China’s butadiene market. Meanwhile, Asian butadiene market prices began to trend down. In Q3, the average butadiene price in Jiangsu and Zhejiang market was RMB 10,709/mt, up 106.4% Y-O-Y.
In Q4, China’s butadiene market price lost ground after sharp ups and downs. After the National Day holiday, some of China’s butadiene enterprises uplifted the ex-works prices, in line with stable Asian butadiene prices. Yet, as the operating rate of some downstream units declined Y-O-Y, the demand failed to bolster China’s market. As the butadiene resources from some new units flowed into the market and some shiploads arrived at East China port, the spot supply of butadiene was sufficient in the market. Thus, the supply failed to lend support to the butadiene market. As seen from the demand, the buying atmosphere was dull. When the butadiene price slid to a low level, downstream enterprises stocked up moderately. The demand for butadiene hardly improved. Under the pressure of supply and demand, the market price of butadiene fluctuated downwards. In Q3, the average butadiene price in Jiangsu and Zhejiang market was RMB 6,171.8/mt, down 32.4% Y-O-Y.
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