2018 China Butadiene Industry Fundamentals Interpretation
In 2018, China’s butadiene supply continued to rally and the demand also saw constant increases. The profit at butadiene producers was also favorable. The butadiene import volume fell while the export volume climbed. With new butadiene units going into production, China’s butadiene capacity will increase in the future.
China’s butadiene supply continues to increase.
In 2018, China’s butadiene capacity was 3,889kt/a, up 180kt/a Y-O-Y, because the butadiene unit at CNOOC and Shell Petrochemicals (phase II) went into production. With new butadiene units running normally in recent two years, China’s butadiene output also saw increases. In 2018, China’s butadiene output was around 2,760kt, up 5.74% Y-O-Y. The self-sufficiency level of China’s butadiene industry improved constantly.
The demand remained in an uptrend.
In 2018, China’s butadiene supply and demand both increased. The total consumption volume of China’s butadiene reached 3,100kt, up 3% Y-O-Y. And the growth rate of the consumption volume slowed down. Therein, PBR was also the largest consumption field among butadiene’s downstream products. Yet, the consumption volume of SBR declined notably in 2018. The consumption volume of other downstream products mostly edged up. The whole consumption volume of butadiene increased somewhat.
The profit at butadiene producers moved up.
In 2018, China’s butadiene market price was relatively stable. Taking Jiangsu market as an example, the butadiene price in Jiangsu market fluctuated within RMB 9,500-14,600/mt. Supported by high butadiene prices, the profit of butadiene industry was also favorable. Although the whole profit in 2018 was lower than that in 2017, the profit of butadiene industry was still higher than that of other industries. Within this year, the operating rate of butene ODH units increased to nearly 40%. The units’ utilization continued to improve.
The import volume will decline while the export volume will increase in the future.
In 2018, China imported around 300kt of butadiene. With China’s butadiene supply increasing, the import dependence degree will probably decline gradually. Within this year, China mainly imported the butadiene in Q1 and Q4. The arbitrage window in Q2 and Q3 was closed, and downstream users mainly consumed domestic butadiene resources. China exported around 180kt of butadiene in 2018, up 350% Y-O-Y. In Q1, some butadiene resources at Sinopec Sabic Tianjin Company were exported. In Q3, as the import price of butadiene was high and the operating rate of downstream industries was low, some Chinese-made butadiene resources were also exported for arbitrage. And the export volume nearly hit an annual high. With China’s self-sufficiency level improving, the import volume will decline while the export volume will increase.
With new butadiene units going into production, the butadiene supply will be sufficient.
In recent years, large-scale ethylene projects have been put into operation in succession, and there are many matched butadiene units as well. In 2019, the butadiene units at Jiutai Energy Inner Mongolia, Zhejiang Petrochemical and Nanjing Chengzhi Yongqing Energy Technology will be put into operation. The newly added capacity will reach 370kt/a. In the coming days, the butadiene units at Liaoning Baolai Chemical and Hengli Petrochemical are expected to go into production after 2020. At that time, China’s butadiene supply will see obvious increases. Yet, for the time being, newly added butadiene units don’t have matched downstream units. Thus, the market competition will be fiercer in downstream industries.
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