Fluctuations in the Butene-1 Market: Price Swings Amid Supply Constraints and Slowing Demand (with Deep Analysis of Crude Oil and Polyethylene Markets)

Recently, the northeast and northwest regions of China, as the main supply and export areas of butene-1, have reduced the supply, resulting in a decline in the overall supply of the Chinese market. Nevertheless, the rate of demand growth is relatively slow, and the reduction on the supply side and the slow growth on the demand side together constitute the basic pattern of the butene-1 market. During this week, the butene-1 market showed a strong volatility.

The auction transaction price experienced the fluctuation of first rising and then falling. From November 1, 2020 to June 1, 2024; The vertical axis represents the futures price of crude oil in yuan per barrel. Crude oil prices have experienced significant volatility during this period. During the period from November 2020 to March 2021, crude oil prices were relatively low, fluctuating between 5,500-6,500 yuan/barrel. After March 2021, crude oil prices rose rapidly, once exceeding 7,500 yuan/barrel. From the second half of 2022 to the beginning of 2023, crude oil prices fell again, falling back to about 6,000 yuan/barrel. Since April 2023, the price of crude oil has started to rise again and recently reached a level of about 7,000 yuan/barrel. Crude oil prices experienced a number of significant increases and decreases during this period, reflecting the high volatility of the market, which can be related to a variety of complex factors such as geopolitics, supply and demand.

In August, the auction transaction price in Northwest China rose to 7170 yuan/ton, with a significant increase from the previous month. However, with the weakening of demand, as well as the construction of Trina Chuang butene-1 and its downstream supporting devices in the Northwest region, the release of a small amount of butene-1 led to the transaction price falling slightly to 7,000 yuan/ton.

The subsequent restart of downstream units shows the predicted trend of polyethylene production. As can be seen from the chart, the polyethylene production forecast data for 2022, 2023 and 2024. Although there are fluctuations in the production forecast for these three years, the overall trend is upward. Production forecasts for 2022 fluctuate between 65-85,000 tons; The production forecast for 2023 fluctuates between 75,000 and 85,000 tons, with a slight increase overall; The production forecast for 2024 fluctuates between 78,000 and 88,000 tons and continues to grow. The next three years polyethylene production will be maintained at a high level, showing a steady growth trend. This may be related to factors such as the growth of downstream demand and the continuous advancement of production technology. The development prospects of this industry are relatively optimistic.

Due to the end of the centralized maintenance period of production enterprises, large-scale devices have been restarted successively, and this change is directly reflected in the increase in market inventory. China's polyethylene production this week totaled 541,600 tons, up 5.27% from last week. With the restart of Yanshan Petrochemical, Dushanzi Petrochemical, Zhongtian Hechuang and other devices, it is expected that polyethylene production will increase next week compared with this week, an increase of about 7.02%. The overall maintenance impact is expected to be 44,500 tons, 34,000 tons less than this week's maintenance, and China's supply is expected to increase. The increase in supply has prompted some traders to adopt more aggressive sales strategies. However, due to the limited growth in demand, both sides of the transaction are still in a state of cautious game, and the trading atmosphere is general. As supply increases, downstream companies are cautiously optimistic about future market trends.

Demand growth is slow and the market is slightly volatile. Despite the reduction in supply, industry sentiment has improved. However, the downstream demand: although the maintenance device has returned, but considering that butene-1 is an upstream and downstream matching device, the increase in demand is also accompanied by the increase in supply, and the slow growth of demand has increased the uncertainty of the market. In addition, it is still in the off-season of downstream demand, and the terminal market is still facing a weak predicament. In the short term, the butene-1 market is difficult to have a strong rebound, and it is expected that the price of butene-1 will continue to shake and finish the trend.