Feb China Butadiene Industry Profit Extended Gains
Introduction: In January, China’s butadiene market price was at a low level, and the butadiene enterprises once faced losses. In February, China’s butadiene enterprises enjoyed better profits in tandem with rising butadiene prices. The butadiene industry chain profit in February improved from January.
In January, China’s butadiene market price was relatively low. Yet, international crude oil prices headed up constantly, driving up the naphtha price. Butadiene enterprises suffered high cost pressure, so they faced certain losses. In January, the profit at butadiene enterprises was negative, and all butadiene units via butene ODH technology were in the downtime. When the butadiene price was low, most of the downstream industries had bumper profits. Especially, the PBR enterprises were more active in production amid improving profits. Some idle PBR units were also restarted, so the overall consumption volume of butadiene ramped up.
In February, with the gradual rise in butadiene price, the profitability at butadiene enterprises improved notably from January. Butadiene enterprises began to obtain profits from suffering losses. On the whole, the profitability of various products in the industrial chain tended to be more balanced. After the Spring Festival holiday, the operating rate of downstream industries resumed being normal gradually, so the consumption volume of butadiene remained in an upswing.
In the coming days, China’s butadiene price is expected to level up, so the profitability of butadiene enterprises will continue to improve. Yet, the profit at downstream enterprises may slide. According to the current profitability of major downstream industries, the profit of most industries was more than RMB 1,000/mt. In the coming days, players should pay attention to the price trend of downstream products. If the butadiene price hikes, the increment in downstream prices will be limited. It does not rule out that some downstream enterprises may cut the operating rate when the profit can’t be guaranteed. At that time, the consumption volume of butadiene will trend down, which will weigh on the butadiene price.
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