Supply and Demand Weakness Leads to Downward Trend in Butadiene Market

August 4th News

According to the commodity market analysis system, the Chinese butadiene market fluctuated and declined this week. From July 28 to August 4, the price of butadiene in China fell from 9,466.67 CNY/ton to 9,050 CNY/ton, a decrease of 4.4% during the period. During this cycle, the Chinese butadiene market showed a downward trend, with port inventory in the East China region running at a relatively low level. However, Chinese refineries were actively shipping, and overall, the supply was relatively sufficient. As prices continued to decline, downstream buyers replenished their inventories at lower prices, and the market trading situation was acceptable, with overall demand still mainly driven by essential needs. Lacking substantial positive support, the price generally declined during the week.

Cost Aspect: As of August 1, international crude oil futures closed lower. The settlement price for the September contract of U.S. WTI crude oil futures was reported at $67.33 per barrel, while the settlement price for the October contract of Brent crude oil futures was reported at $69.67 per barrel. Market concerns about OPEC potentially increasing oil production, coupled with weak U.S. employment data weighing on demand prospects, contributed to the decline.

Supply side: Sinopec's various sales companies are executing a listed price of 9,200 CNY/ton for butadiene, with a reduction of 200 CNY/ton this week.

The 160,000 tons/year butadiene plant of Fushun Petrochemical in China is operating normally, with no external sales and quotations suspended.

Shenghong Petrochemical's 200,000 tons/year butadiene unit is operating normally, with a price of 8950 CNY/ton.

Demand Side: According to the commodity market analysis system, as of August 4th, the butadiene rubber market in East China was consolidating at a weak level. Both natural rubber and butadiene rubber futures have fallen. Downstream tire factories are making limited inquiries based on their immediate needs, resulting in low trading volumes in the spot market, with traders lowering their offers. Currently, the main offers for butadiene from Daqing, Yangzi, and Qilu are between 11,850 to 12,300 CNY/ton; some private brands are quoted around 11,600 to 11,900 CNY/ton.

Future Market Forecast: Recently, crude oil prices have shown a weak and fluctuating trend, providing insufficient guidance to the butadiene market and having limited impact. This week's market performance will still be influenced by supply and demand fundamentals. Downstream facilities have partially restarted recently, suggesting an expected increase in supply. On the demand side, overall demand remains relatively rigid with limited support. Overall, considering both supply and demand, the market is expected to remain weak in the short term.