Both Supply and Demand Tightening Drives Butadiene Prices Up Sharply in March

April 1st, according to news

According to the commodity market analysis system, the Chinese butadiene market showed a fluctuating upward trend in March 2026. From March 1st to March 31st, the price of butadiene in China rose from 9,993.33 CNY/ton to 18,066.67 CNY/ton, with an increase of 80.79% during the period.

In March 2026, the butadiene market in China showed a "mainly strong pull-up with brief corrections" trend. The upward momentum persisted throughout the month, driven by strengthened costs and tightened supply, which created a positive synergy. Despite relatively weak downstream demand, prices still surged significantly. Although there were brief minor corrections, they did not alter the overall upward trend.

Cost Perspective: In March, cost factors became the core driver behind the price increase of butadiene. The ongoing escalation of geopolitical conflicts in the Middle East has triggered global concerns about crude oil supply, causing international oil prices to surge sharply and remain at high levels. As a byproduct of ethylene cracking, butadiene production capacity is highly dependent on the naphtha cracking route, and its prices are closely linked to the trends of crude oil and naphtha. The sharp rise in crude oil prices has directly pushed up the overall costs across the refining and petrochemical industry chain, while the simultaneous strengthening of naphtha prices has led to a rigid increase in butadiene production costs. Disruptions in shipping and logistics have further driven up the costs of importing raw materials, putting pressure on refining and petrochemical enterprises and indirectly reinforcing the underlying support for raw material prices. As of March 31, the settlement price for the May contract of U.S. WTI crude oil futures was $101.38 per barrel, while the settlement price for the June contract of Brent crude oil futures was $103.97 per barrel.

Supply side:

This month, multiple main butadiene plants in China have entered a concentrated maintenance period, leading to a continuous decline in the overall operating load of the industry and a significant reduction in spot production. Major overseas Asian production facilities have also experienced reductions and force majeure situations, coupled with disruptions in maritime shipping channels, resulting in a substantial decrease in the volume of imported goods arriving at ports, with insufficient replenishment. Port inventories in China have remained at low levels, with a shortage of circulating spot resources in the market. Suppliers are holding back from selling and supporting higher prices, further driving up the market.

Sinopec's various sales companies have set the butadiene price at 18,200 CNY/ton as of March 31, an increase of 8,100 CNY/ton from 10,100 CNY/ton on February 28.

Dongming Petrochemical's 50,000 tons/year butadiene plant is operating normally, with 392 tons sold externally at a minimum price of 17,000 CNY/ton.

Satellite Chemical's 90,000 tons/year butadiene plant is operating normally, with a price increase of 500 CNY/ton, now priced at 18,000 CNY/ton.

Demand side:

In the face of a rapid and significant increase in raw material prices, the downstream synthetic rubber industry chain in China is under noticeable pressure, with production profits being squeezed. Most companies have chosen to reduce their load to avoid risks. Downstream end-users have a strong resistance to high-priced raw materials, and purchases are mostly maintained at a small scale based on necessity, with little willingness to stock up in bulk. Only a few niche downstream demands remain stable, which is insufficient to offset the overall weak demand situation. The overall performance on the demand side is weak, exerting a certain restraining effect on the market's upward trend.

In March 2026, the Chinese polybutadiene rubber market experienced a wide-ranging and significantly upward independent trend, breaking the previous consolidation pattern, with the price level shifting significantly higher. This was mainly driven by strong cost support and expectations of tightened supply. Downstream demand followed cautiously, presenting an operational characteristic of "cost support, supply holding back, and rigid demand following." According to the commodity market analysis system, as of March 31, the polybutadiene rubber market in the East China region showed a slight decline. International crude oil prices were at a high level, providing strong cost support for polybutadiene rubber, but downstream inquiries remained stagnant at high prices, leading merchants to lower their offers by 200-300 CNY per ton. Currently, Daqing, Yangzi, and Qilu polybutadiene are quoted at 17,600-17,800 CNY per ton; some private brands are quoted around 17,400-17,650 CNY per ton.

Future Market Forecast:

Cost uncertainties due to geopolitical tensions remain, and the high support for crude oil is unlikely to quickly dissipate; the pace of restarting maintenance facilities is slow, and the tight supply situation will be difficult to completely alleviate in the short term. However, the pressure of losses downstream continues, and the willingness to start production and make purchases is unlikely to significantly improve, so the demand-side constraints will persist. Overall, the market's one-sided surge may come to an end, with bullish and bearish forces entering a phase of balanced competition. It is expected that the market will mainly fluctuate within a high range. The key focus going forward will be on tracking cost fluctuations, the progress of facility commissioning and maintenance, and changes in actual downstream transactions.