Will Robust BD Price Begin to Fall in the Short Run?
Snapshot: On May 11, Sinopec cut the butadiene ex-works price by RMB 200/mt to RMB 11,600/mt, which was the first drop in the price of Sinopec in 2024. Affected by a fall in deep-sea cargoes, low loads of crackers, exports and unit maintenance, the market price of butadiene remained in an uptrend from early 2024. However, downstream demand gained limitedly. Thus, China’s butadiene market was in a stalemate from March. From March to April, China’s butadiene price saw minor falls. Heading into May, the high price of butadiene trends down, but the decrement in price may be limited in May.
From 2024, China’s butadiene price remained in an upswing. As of May 10, the ex-works price of butadiene at Sinopec was RMB 11,800/mt, up 34% from early 2024. The delivered price of butadiene in Shandong stood at RMB 11,640/mt, up 30% from early 2024. Despite the price fall in March, China’s butadiene price was still at a high level, hovering within RMB 11,300-11,900/mt. It was mainly backed by a low butadiene supply in China. Affected by low loads of crackers, transportation problems of deep-sea resources and the unexpected shutdown of some units in Southeast Asia, the butadiene supply in Northeast Asia was tight, pushing up Asian market prices accordingly. The butadiene price once surged to $1,500/mt (CFR Northeast Asia). Therefore, due to arbitrage opportunities, batches of Chinese-made butadiene resources were exported. Moreover, some butadiene units took maintenance, greatly underpinning domestic prices. Yet, with the butadiene price rising, downstream users faced high cost pressure. In recent months, the demand for butadiene in China whittled down, curbing the increment in butadiene price.
In May, the support from early favorable factors may ebb somewhat. Some deep-sea cargoes for June may arrive at East China port in succession. The export volume of butadiene in China is expected to move down. Recently, the Asian butadiene price has inched down, failing to bolster China’s domestic market. In terms of supply, some shut butadiene units are likely to run normally. Besides, there will be products available from the new butadiene unit. Thus, the support for the butadiene price may weaken somewhat. Thus, most players adopt a bearish sentiment to the market. Sinopec first cut the ex-works price of butadiene. Will China’s butadiene market continue to fall in the short run? Players should pay attention to changes in supply and demand in the coming days.
The butadiene supply is expected to inch up in the short run.
In the next three months, China’s butadiene supply may trend up, which may change slightly in May and climb notably in June and July. In May, some of China’s butadiene units may be under maintenance. Therein, the butadiene units at Sinopec Qilu Company (one set), Sinopec Shanghai Petrochemical (one set), Sinopec Beijing Yanshan Company (one set), Zhejiang Satellite Petrochemical, Zhejiang Petroleum & Chemical Phase II, Fujian Refining & Petrochemical and Sinopec Zhongke (Guangdong) Refinery remain offline at present. BASF-YPC plans to take maintenance of its unit in late May. Thus, it’s hard to see a rise in domestic output. Currently, players mainly pay attention to the output status of a new 100kt/a butadiene unit at Shandong Jincheng Petrochemical Group. As it doesn’t match downstream units, the butadiene resources may all flow into the market, weighing on some players’ sentiment. Yet, in May, China’s butadiene supply may pick up limitedly. At present, most butadiene producers may not face sales pressure, underpinning the price from the supply. In June and July, with fewer units under maintenance, China’s butadiene supply may resume, so its support for price is likely to weaken compared to May.
Remarks: The butadiene output in May, June and July refers to the forecast value.
The export volume of butadiene in China may slide in the short run.
From June, the export volume of butadiene in China may whittle down from previous months. In June, it is estimated that there may be more than 20kt of deep-sea cargoes replenished to the Asian market. The demand for butadiene from China’s mainland may be curtailed in Northeast Asia, especially in South Korea and China’s Taiwan. In May, negotiations on exports in China may turn tepid, and the export volume of butadiene may dip. However, as the butadiene price trends up due to supply cuts in Europe, the arbitrage between Europe and Asia has been closed. Thus, deep-sea cargoes may hardly be replenished to the Asia market constantly. In the short run, players should pay attention to the unit restart status in Southeast Asia and its resource flow status.
In terms of demand, at present, the operating rate of some downstream industries has dropped to a low level, so its further decrement may be limited. Currently, most downstream enterprises may restart units when the butadiene price is suitable.
On the whole, in May, China’s butadiene price is likely to ebb slightly amid the weakened Asian butadiene market. However, China’s butadiene supply may advance slightly, and some downstream enterprises are likely to restart their units. Thus, the decrement in demand may be limited. In June and July, China’s butadiene supply may gain ground, with minor increments. Players should eye on the supply status of imported resources. If imported resources are hardly replenished to China’s market, it may be different to see constant drops in butadiene price considering that some downstream units may be restarted.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
Please click "Read more" for the full article.
