2021 China Butadiene Industry Chain Profit Moved Down
Introduction: In the past two years, China’s butadiene capacity sprang up. The butadiene self-sufficiency rate of supply in China gradually leveled up. With China’s butadiene resources being sufficient, the profit at butadiene enterprises dwindled accordingly. As seen from the whole industry chain, the butadiene profit moved down from upstream industry to downstream industry. The profit at butadiene enterprises was squeezed notably.
In terms of the profitability of the butadiene industry chain in 2021, the downstream profitability was notably better than that of the butadiene industry. Especially, NBR, NBL and ABS industries enjoyed bumper profits. Although the profit of the NBL industry in 2021 slid compared with that in 2020, its profitability was still better than that of other downstream industries as a whole. The profitability of the synthetic rubber industry had no obvious advantage over other industries, but its profit changed from negative value in previous years to positive value currently. It was mainly because the decline in synthetic rubber supply in 2021 propped up the price. Besides, prices of feedstock butadiene were at a low level, so the profitability of synthetic rubber enterprises improved notably.
In terms of the profitability of the butadiene industry, there are two production technologies in China. The capacity utilization rate of butadiene units via butene ODH technology is relatively low due to the high production cost. At present, China’s butadiene resources are mainly produced via the C4 extraction technology, and 96% of the butadiene supply in China comes from this technology. In 2021, except for the relatively high price of butadiene in Q2 and Q3, China’s butadiene industry faced losses in Q1 and Q4 in both two technologies. Especially in Q4, the profit at butadiene enterprises crashed.
In the future, batches of fresh butadiene units will come online, and these units are adopted the C4 extraction technology. There are no planned butene ODH units put into operation. With China’s butadiene supply being abundant, the butadiene price will hardly be high. Thus, the profit at butadiene enterprises will hardly improve. Yet, as seen from the downstream industry, with the feedstock cost dropping, the production cost of the downstream industry will decline. Downstream profitability will be relatively considerable amid stable demand growth. On the whole, the industry chain profit will continue to head down in the future.
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