China Butadiene Market Will Probably Trend Up

China’s butadiene market stopped falling and began to advance since mid-April. And then, traders were reluctant to sell at lows in anticipation of further increase in butadiene prices, and low-priced resources were not available in the market. China’s butadiene market fluctuated downwards since early March. And the 120kt/a butadiene unit at Sinopec Wuhan Company was shut on April 8. Therefore, will China’s butadiene market turn to rally with the maintenance season drawing near?

The supply is expected to drop.

In April, the supply will slide from March. And China’s butadiene supply will decrease constantly in May. The 120kt/a butadiene unit at Sinopec Wuhan Company has been shut for more than 20-day maintenance on April 8. Meanwhile, the butadiene unit at Shenhua Ningxia Coal Industries has been shut again in early April, and the restart time is to be determined. Shandong Weite Chemical has no plans to restart the unit in the short run. Available butadiene resources at PetroChina Fushun Petrochemical are limited as the self-use volume to downstream industries increases. Although Shandong Huayu Rubber has restarted its 60kt/a butadiene unit, the increase volume is less than the losses volume during the units’ maintenance at Sinopec Wuhan Company. Overall, the whole supply will drop in April.

In May, the 165kt/a unit at Sinopec Zhenhai Refining & Chemical and the 130kt/a unit at BASF-YPC will be shut for maintenance. Besides, North Huajin Chemical Industries plans to shut its butadiene unit for maintenance in June. Thus, Liaoning North Dynasol Synthetic Rubber will stock up in May, and sparse butadiene will flow into the market then. The 145kt/a butadiene unit at CNOOC and Shell Petrochemicals will run normally in May, and Shenhua Ningxia Coal Industries and Shandong Weite Chemical will restart their butadiene units while the increase volume of supply will not catch up with the losses volume due to units’ maintenance.

The demand will bolster the butadiene market.

The price spread between butadiene and synthetic rubber tended to be rational along with the price increase in the synthetic rubber. That also boosted the butadiene price. In Q2, the synthetic rubber units will be shut down for maintenance intensively. Thereinto, the units at PetroChina Sichuan Petrochemical, Sinopec Yangzi Petrochemical, PetroChina Jilin Petrochemical and Zhejiang Weitai Rubber will take overhauls in April and May. Besides, the SBR unit at Sinopec Qilu Company runs at low load and will not be restarted in the short run. Thus, the supply side will lend some support to the synthetic rubber market. With the price rallying, the social stock will be consumed in succession. The Q2 of 2018 marks the peak consumption season of downstream tire industry, which will speed up the consumption of synthetic rubber.

Low-priced imported resources are not available in the market.

China’s butadiene market fluctuated downwards since early March while prices of imported resources held firm relatively. Traders adopted bullish sentiment to the market due to the supply decrease caused by the intensive units’ overhaul in the coming days. Offers are at highs accordingly. Thus, the market is in a stalemate. In Q2, 2018, the butadiene units in the U.S. will take overhauls intensively. Some butadiene resources in Europe and South Korea will be delivered to the U.S. for the arbitrage. The butadiene resources in Southeast Asia will be consumed by local plants. Thus, there will be sparse butadiene resources available in the market. It was heard that the ethylene unit at Shell Singapore ran unsteadily recently, thus the supply of supply declined compared with early days.

Recently, there are more bullish factors in the butadiene market, but the high social stocks at rubber industries will drag down the market to a large extent. Although there are some high-cost butadiene resources in East China, traders are unwilling to sell at lows amid successive supplement of low-priced resources. Overall, China’s butadiene market will probably trend up in the coming days while the upward extent will be narrow.