Weak Supply and Demand Weighs on Butadiene Market in May

May 28th, according to news,

In May 2026, the butadiene market in China showed an overall downward trend, with the market focus continuously declining throughout the month. The trading atmosphere was relatively weak, and the sentiment among merchants was generally cautious. According to the commodity market analysis system, from May 1st to 28th, the price of butadiene in China fell from 13,200 CNY/ton to 12,066.67 CNY/ton, a decrease of 8.59% during this period.

Cost Perspective: In May, the continued weakening of butadiene cost support has become one of the key drivers behind the downward trend in market prices. As a byproduct of ethylene cracking, butadiene’s price movement is highly correlated with international crude oil and naphtha prices. This month, influenced by easing geopolitical tensions in the Middle East, international crude oil prices have experienced volatile declines, while naphtha prices have also softened accordingly. Overall, refining and petrochemical feedstock prices are under pressure, leaving insufficient upward momentum to support butadiene prices from the cost side. Meanwhile, profit margins across the chemical industry chain remain relatively ample, and China’s cracking units are operating steadily, reducing the incentive for raw material costs to be passed on to butadiene prices. As of mid-May, theoretical profits from butadiene extraction units had fallen by 37% compared to the previous month, and profits from oxidative dehydrogenation units had also declined by around 43%. The cost side’s supportive effect on prices has further weakened, driving continuous softening in butadiene market quotations. As of May 27, the settlement price for the July contract of U.S. WTI crude oil futures stood at $88.68 per barrel, while the settlement price for the July contract of Brent crude oil futures was $94.29 per barrel.

Supply side:

In May, the operation of butadiene plants in China was mixed, with some production facilities under maintenance, leading to a local reduction in supply. At the same time, multiple plants resumed production, offsetting the reduction caused by the maintenance. Overall, the market supply remained loose, with ample replenishment of circulating goods. The pace of shipments within the market was slow, and transactions fell short of expectations, resulting in a sluggish inventory digestion process for enterprises. To accelerate the circulation of goods, both producers and traders continuously lowered their quotations. Additionally, the normal arrival of imported goods further supplemented the Chinese market, keeping the overall supply pressure high and significantly suppressing market conditions.

Sinopec's various sales companies have set the butadiene listed price at 12,000 CNY/ton as of May 28, a decrease of 800 CNY/ton from the 12,800 CNY/ton on April 28.

Dongming Petrochemical's 50,000 tons/year butadiene plant is operating normally, with 280 tons for external sales at a minimum price of 11,600 CNY/ton.

Satellite Chemical's 90,000 tons/year butadiene unit is operating normally, with 336 tons available for external sales, starting at 11,800 CNY/ton.

Demand side:

In May, the overall demand for butadiene downstream in China was weak, becoming the main factor dragging down the market. The overall operating levels of major downstream industries such as synthetic rubber and latex were low, with insufficient production enthusiasm. The market atmosphere in the terminal rubber products and tire sectors was flat, with a slowdown in finished product turnover, and enterprises generally faced inventory accumulation issues. As a result, downstream manufacturers' purchasing attitudes became more conservative, mostly adhering to a just-in-time procurement model, showing low willingness to replenish stocks, and having strong demands for price reductions on raw materials. The overall transmission of the industrial chain was not smooth, with a strong wait-and-see sentiment in the market, and there were few concentrated stocking operations. The demand side could not provide effective support for the market.

According to the commodity market analysis system, as of May 27, the butadiene rubber market in East China showed a weak consolidation. International crude oil prices fluctuated narrowly, and downstream inquiries remained cautious. The supply price of butadiene rubber was reduced, and spot traders slightly lowered their offers. Currently, Daqing, Yangzi, and Qilu butadiene rubber are quoted at 14,650 to 14,900 CNY per ton; some private brands are quoted around 14,500 to 14,700 CNY per ton.

Future Market Forecast:

Looking at the current fundamental factors, China’s butadiene market is expected to remain volatile and weak in the short term. Fluctuating international crude oil prices make it difficult for costs to provide strong support quickly. Meanwhile, downstream demand has yet to show any significant improvement, leaving market participants lacking confidence in bullish bets and limiting the room for price increases. However, next month will see an increase in plant maintenance activities across the industry, which should gradually tighten market supply and provide some support to prices, helping to establish a floor for the market. As raw material prices gradually fall back to lower levels, downstream industries’ profitability is likely to improve, boosting production and procurement intentions steadily. If crude oil prices stabilize and rebound in the future, coupled with tighter supply and recovering demand—several positive factors coming together—China’s butadiene market could gradually halt its decline and stabilize, eventually entering a period of fluctuating recovery over the medium term. Going forward, it will be crucial to closely monitor key factors such as trends in international crude oil prices, developments in plant maintenance activities, changes in downstream industry operating rates and order volumes, and fluctuations in port inventories.