Supply and Demand Dynamics Coupled with Cost Fluctuations Lead to February's Volatile Decline in Butadiene Prices in China

February 28 news

According to monitoring by the commodity market analysis system, China’s butadiene market experienced overall volatile downward trends in February 2026. From February 1 to 28, the price of butadiene in China fell from 10,533.33 CNY/ton to 10,026.67 CNY/ton, representing a price decline of 4.81% over the period. This month’s market performance was influenced by a combination of supply-demand dynamics, cost fluctuations, policies, and geopolitical factors, resulting in pronounced short-term ups and downs. Overall, the market showed a weak, oscillating pattern, and the industry’s supply-demand contradiction has gradually become more evident.

Cost Perspective: From the cost standpoint, crude oil—a key upstream feedstock for butadiene production—exhibits a high price correlation with butadiene. This month, the sharp fluctuations in the crude oil market have directly impacted the cost structure on the supply side of butadiene, making it a significant factor influencing the market trend. Geopolitical factors have dominated the crude oil price volatility this month: the ongoing U.S.-Iran standoff has continued to escalate, tensions in the Middle East and between Russia and Ukraine have remained high, and concerns about the security of the Strait of Hormuz shipping route have further fueled market pricing. As a result, the market has factored in a geopolitical risk premium, driving international crude oil prices to fluctuate and rise. The NYMEX WTI crude oil price has seen its highest year-to-date increase reach 17%, while the ICE Brent crude oil price has recorded a maximum increase of 18.5%. Chinese crude oil futures have also shown a volatile yet generally strong trend, with end-of-month closing prices significantly higher than those at the beginning of the month, providing substantial temporary support to butadiene costs. As of the 27th, the settlement price for the April contract of U.S. WTI crude oil futures was reported at $67.02 per barrel, while the settlement price for the May contract of Brent crude oil futures stood at $72.87 per barrel.

Supply side:

In February 2026, the butadiene supply in China overall showed a pattern of "stable release and local relaxation." The previously tight supply situation gradually eased, becoming an important factor influencing the price correction this month. In terms of facility operations, the main butadiene production facilities in China operated smoothly, with core enterprises such as Qixiang Tengda maintaining high load operations. The capacity utilization rate remained consistently at a high level, and the self-sufficiency rate of butadiene was high, effectively ensuring the basic supply. At the same time, there was no significant fluctuation in the ethylene plant load in China this month, and the by-product supply of butadiene was stable. The supply gap caused by previous plant maintenance was gradually filled, and the market availability improved. Overall, the butadiene supply in China this month tended to be more relaxed, with ample supply, providing a fundamental support for the price correction and setting the tone for the overall weak and volatile supply situation this month.

As of February 28, the listed price for butadiene at Sinopec’s various sales companies is 10,100 CNY per ton, a decrease of 500 CNY per ton compared to the price of 10,600 CNY per ton on January 29.

Dongming Petrochemical's 50,000 tons/year butadiene plant is operating normally, with 280 tons sold externally at a minimum price of 10,000 CNY/ton.

Satellite Chemical Lianyungang Petrochemical's 90,000 tons/year butadiene unit is operating normally, with a price of 10,000 CNY/ton.

Yantai Wanhua Chemical's Phase II 200,000 tons/year butadiene plant is operating normally, with the listed price at 9,980 CNY/ton.

Demand Side:

In February, the downstream demand for butadiene in China showed characteristics of "delayed resumption of work, mainly rigid demand, and overall weakness." The lack of support from the demand side became the core factor constraining the upward trend of market prices. This month coincided with the Spring Festival holiday, and the resumption of work by downstream enterprises was generally slow, with most companies gradually resuming operations around the eighth day of the first lunar month. In the early stages of resumption, the main focus was on capacity recovery and inventory organization, leading to a delayed release of procurement demand and a light market trading atmosphere. The synthetic rubber industry performed weakly, with nitrile butadiene rubber (NBR) and styrene-butadiene rubber (SBR) enterprises maintaining high inventory levels, highlighting the pressure of inventory clearance. Enterprises were cautious in their purchasing attitudes, only replenishing rigid demand without large-scale stockpiling, resulting in continued weak procurement demand for butadiene. Affected by butadiene price fluctuations and raw material cost pressures, the profits of synthetic rubber enterprises were under strain, and some companies slightly reduced their operating rates, further suppressing the release of butadiene demand.

According to the commodity market analysis system, as of February 27, the price of butadiene rubber in the East China region was 13,010 CNY/ton, a decrease of 1.81% from 13,250 CNY/ton at the beginning of the month. The main factors affecting the price were increased inventory, lower raw material prices, and insufficient downstream production after the holiday.

Market Forecast:

In the short term, the butadiene market in China will find it difficult to rapidly change its pattern of loose supply and demand, and the market will continue to operate with weak and volatile trends. On the supply side, Chinese facilities will continue to operate smoothly, with imported supplies steadily supplementing the market, which is expected to maintain a high level of availability. As the second quarter approaches, with a concentrated period of maintenance for ethylene facilities, there may be a slight reduction in short-term supply, but this is unlikely to provide substantial support to the market. In terms of costs, geopolitical conflicts still carry uncertainties, and crude oil prices may remain volatile, providing some phased support to the cost end of butadiene, but the effect of cost transmission is limited.

Overall, it is expected that the butadiene market in China in March will show a trend of "weak and stable fluctuation, with a slight recovery," with prices potentially rising slightly, but the price increase will be limited. Subsequently, it will be necessary to closely monitor the progress of resumption of work and production downstream, plant maintenance dynamics, crude oil price trends, and the recovery of terminal demand. If there is a significant improvement in demand, the market is expected to gradually break away from the weak situation; otherwise, it will continue to maintain a fluctuating downward trend.