China BD Price Perked Up, Fueled by Robust PBR and Asia Markets
Snapshot: From end-August, China’s butadiene market price hovered at highs after surging, and low-priced resources were hardly seen in the market. High PBR futures prices strongly pulled up the butadiene market. Besides, the Asian butadiene market remained in an upswing, bolstering China’s market to some extent. The market price of butadiene in China stayed robust. In the short run, China’s butadiene market may mainly fluctuate firmly.
China’s butadiene market price went higher notably from end-August.
From end-August, China’s butadiene market price surged. On September 1, the market price of butadiene rose by as much as 6% in a single day, the largest single-day increase in the year except the beginning of 2023. The butadiene price jumped up, mainly taking cues from the rising prices of PBR futures. The spot price of butadiene ramped up accordingly. Yet, the fundamentals didn’t see notable changes. After the price upsurge, the overall butadiene market hovered at highs. Two butadiene units in China were shut down beyond plans. Besides, the operating rate of foreign crackers underperformed, propping up Asian butadiene prices greatly. Boosted by that, China’s butadiene market price perked up. Low-priced butadiene resources were hardly seen in the market. As of September 14, the butadiene price in the Shandong market stood at RMB 8,925/mt, up 11% from end-August.
PBR market swung up, pulling up the butadiene price.
After the listing of PBR futures, the spot price was greatly affected. From end-August, the price of PBR futures climbed to a high level, strongly pushing up the spot market. There was not much favorable support from the fundamentals. However, as PBR resources were mainly traded via contract, the spot availability and deliverables were limited. Thus, the supply-demand contradiction was amplified in the market. In September, the price spread between butadiene and PBR continued to enlarge, and the largest price spread reached RMB 5,000/mt. The profit at PBR producers ramped up, stimulating their production enthusiasm. Thus, the butadiene price was boosted somewhat. Especially in early September, the market price of butadiene went up greatly, mainly driven by rising PBR prices.
The Asian butadiene market remained firm, underpinning China’s market.
In September, the Asian butadiene market remained in an uptrend, bolstering China’s market. Affected by high cost and units’ maintenance, the operating rate of foreign crackers was average. Besides, the arrival time of some deep-sea butadiene cargoes was postponed. Some downstream enterprises in South Korea and China’s Taiwan had certain demand for spot butadiene. As of September 8, the closing price of butadiene was $950/mt (CFR China). Some selling price was $1,100/mt, equivalent to RMB 9,100/mt roughly and higher than the current spot dealing price in China. In September, the price spread between China and Asia narrowed. The Asian butadiene market moved up greatly, shoring up China’s market. Most players were reluctant to sell at lows.
Since mid-September, two butadiene units in China have been shut down unexpectedly. Besides, with the National Day holiday drawing near, downstream users may stock up moderately. Most butadiene producers with merchantable resources will not face sales pressure. Thus, the market price of butadiene may remain high. In the short run, China’s butadiene market may continue to remain firm, backed by a robust synthetic rubber market.
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