Butadiene Downstream Industry Profits Comparison

China’s butadiene market fluctuated upwards in 2018, while the fluctuating range shrank notably from previous years. Up to now, butadiene market prices hovered within RMB 9,600-13,700/mt in East China. The lowest price in 2018 climbed notably from past years. Especially in Q2 and Q3, butadiene prices still remained in an uptrend despite weak downstream demand. Thus, downstream users suffered high production cost, and the operating rate hit a new low as well. For the time being, butadiene market prices maintained a high level. Thus, what is the current profitability of downstream industries? Will the demand bolster the butadiene prices strong?

Losses at major downstream industries were severer.

PBR and SBR industries, as two major downstream industries of butadiene, suffered severer losses in profits currently. In the whole year, the theoretical profits are negative, and losses will be more serious in the future. In July, the loss via producing SBR reached around RMB 2,900/mt and that via producing PBR was RMB 2,000/mt roughly. Under high production cost, some synthetic rubber enterprisers who purchased the feedstock outside shut down the units or cut the operating rates. The operating rate at synthetic rubber enterprises once dropped to 40% or even lower, thus the demand for butadiene saw certain declines.

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