Supply and Demand Weigh on Costs, Pushing Butadiene Market Downward

May 11th News

In early May 2026, the butadiene market in China showed a weak downward trend, with an overall cold trading atmosphere. The market exhibited a pattern of weakened cost support, relatively ample supply, and sluggish terminal demand. There was a strong bearish sentiment in the market, with suppliers continuously lowering their quotes. Downstream buyers were cautious and pressed for lower prices, resulting in most transactions being small, essential orders. Additionally, the lackluster performance of auctioned goods further contributed to the evident downward pressure on the market. According to the commodity market analysis system, from May 1 to May 11, 2026, the price of butadiene in China fell from 13,200 CNY/ton to 12,466.67 CNY/ton, a cumulative decrease of 5.56%. In the short term, the market is in a weak adjustment phase.

Cost Perspective: This period, the cost support for butadiene has been relatively weak, and upstream energy products have failed to provide sufficient impetus to the spot market. As a byproduct of cracking processes, butadiene’s price trend is highly correlated with international crude oil and naphtha prices. Although international crude oil has experienced a temporary rebound during this period, the upward momentum has proved unsustainable, and naphtha’s upward drive remains limited. Overall, feedstock prices in the refining and petrochemical industry have been hovering at a relatively weak level. Meanwhile, profit margins across the chemical industry chain remain ample, and cracking units operated smoothly. Consequently, the bottom-supporting effect of feedstock costs on butadiene has been insufficient, leaving it unable to effectively offset the downward pressure stemming from market supply and demand dynamics. As of May 8, the settlement price for the July contract of U.S. WTI crude oil futures was $95.42 per barrel, while the settlement price for the July contract of Brent crude oil futures was $101.29 per barrel.

Supply Side: In the first half of the month, the overall supply of butadiene in the Chinese market was relatively loose, with continuous pressure from the supply of goods in the industry. Recently, some butadiene production plants in China have been alternating between maintenance and resumption of operations, leading to frequent fluctuations in plant operations. The overall operating rate in the industry has remained at a moderate level. At the same time, some imported goods have arrived smoothly, further supplementing the spot circulation volume in China. The performance of auctioned goods in the market has been poor, with many batches failing to sell. Producers have proactively lowered their quotes to promote transactions. There is an ample supply of spot goods in the market, and there are no significant signs of inventory reduction.

Dongming Petrochemical's 50,000 tons/year butadiene plant is operating normally, with 336 tons sold externally at a minimum price of 12,200 CNY/ton.

Satellite Chemical's 90,000 tons/year butadiene plant is operating normally, with 336 tons available for external sales, starting at 12,300 CNY/ton.

Demand side:

In this period, the downstream demand for butadiene in China has remained persistently weak, lacking the support of concentrated inventory replenishment. The operating load of the downstream industries such as synthetic rubber and latex is low, with the orders from the end-user industries like tires and rubber products being flat, leading to a slow pace of finished goods shipment and a high pressure on inventory digestion for enterprises. Downstream factories generally maintain rigid demand procurement, showing a weak willingness to purchase and significant price suppression behavior, which results in a strong resistance to high-priced raw materials. This hinders the transmission rhythm of the industrial chain, making it difficult to pass on the purchasing benefits upstream. The overall chemical market is characterized by a heavy atmosphere of wait-and-see, without any concentrated inventory replenishment actions, further dragging down the market performance of butadiene. As of May 11, the market trend of polybutadiene rubber in East China has been narrowly adjusted, with international crude oil prices fluctuating at high levels, and the supply price of polybutadiene rubber remaining stable for now. Spot traders have made minor adjustments to their quotations. Currently, the quotes for Daqing, Yangzi, and Qilu polybutadiene are around 15,700-15,850 CNY/ton; some private brands are quoted at approximately 15,600-15,750 CNY/ton.

Market Outlook:

Based on a comprehensive fundamental analysis, the Chinese butadiene market is likely to remain in a range-bound, consolidative trend in the short term. On the supply side, uncertainties surrounding plant maintenance persist, and there are expectations of tighter supply going forward, which should provide some floor support for prices. However, downstream demand is unlikely to rebound rapidly in the short term, and pessimistic market sentiment will not dissipate quickly, leaving upward momentum in the market relatively constrained. In the near future, key factors to watch include crude oil price fluctuations, the progress of plant maintenance in China, the actual trading volume in the market, and the indirect impact stemming from geopolitical developments in the Middle East.