China Butadiene Market Remained in a Downtrend

After the Spring Festival holiday, some butadiene producers cut the ex-works prices while the downward extent was limited. As some downstream retailers began production in succession, the butadiene prices edged up. However, some downstream producers resumed normal operation constantly while the butadiene prices seemed to trend down slightly. Thus, how does China’s butadiene market fluctuate in O2, 2018?

Downstream producers resumed production in succession, while the demand was limited.

After the Spring Festival, the demand from some downstream retailers, especially the rubber latex producers, was strong relatively, which pushed up the butadiene spots price obviously. However, the synthetic rubber market fluctuated downwards. Currently, the operating rates of SBR and PBR industries were high, while the finished products went out from the warehouse at a slow pace. Besides, market prices of the synthetic rubber declined slightly, dragging down the butadiene market. Most downstream producers had prepared the butadiene stock for March and April. Thus, they showed resistance to high-price butadiene resources.

Bullish and bearish factors coexisted.

The 145kt/a butadiene unit at CNOOC and Shell Petrochemicals (phase II) will be tested run in mid-March, and the unit will run normally between H2 of March and April. Then, the monthly output will increase by 10kt roughly. Meanwhile, the whole butadiene supply in northern market is expected to climb in April. The butadiene units at Shandong Weite Chemical, Shenhua Ningxia Coal Industry and Jiangsu Sailboat Petrochemical will run normally. The SBS unit at Shandong Yuhuang Chemical will be shut down for one-month maintenance since late March. Thus, the rigid demand in northern market will shrink. The 100kt/a PBR unit at Sinopec Yangzi Petrochemical will be shut for around 25 days. Overall, China’s butadiene supply in April will increase by 30kt or so from March.

However, since April, China’s butadiene units will take overhauls in succession. The 120kt/a butadiene unit at Sinopec Wuhan Company will be shut for more than 20-day maintenance in H2 of April. The 165kt/a unit at Sinopec Zhenhai Refining & Chemical will be shut for more than 40-day maintenance. The 130kt/a unit at BASF-YPC will be shut for more than 20-day maintenance in late April. According to statistics, the butadiene supply will decrease by around 10kt in April and 20kt in May.

Overall, there will be sparse favorable factors seen in China’s butadiene market in the short run. The synthetic rubber market remains muted for the time being. The demand from tire industry is limited. With units’ overhaul intensively and demand recovery, China’s butadiene market will take the turn for the better in H2 of April. Before that, China’s butadiene market will probably remain in a downtrend.