A Dip in Feedstock Cost Drives Down the Butadiene Prices in Europe at the End of May 2023

Butadiene prices have continued to decline across the European market in the last week of May 2023. The oversupplies of feedstock Ethylene have limited the positive development of Butadiene in the regional market. However, Brent crude oil prices have increased by 1.5% and were assessed at $ 76.98 per barrel on 26th May 2023 but had limited bearing over the prices of Butadiene. Furthermore, on the input energy front, with the declining cost of TTF Natural Gas, German state-owned utility Uniper reported a first-quarter net profit of 6.7 billion Euros ($7.43 billion) and contributed to lessening the inflationary pressure in one of the major economies of Europe. According to the statistics agency Eurostat, Eurozone inflation dropped from 7% to 6.1% in May, compared with the previous month.

Although, over the past few weeks, consumption of Butadiene from downstream synthetic rubber such as Synthetic Butadiene Rubber, the Nitrile Butadiene Rubber industry has continued to improve as the end-user automotive sector has gained pace in the regional market. According to the European Automobile Manufacturing Association (ACEA) and KBA federal transport authority, Europe car sales increased in the previous month; thus, the offtake of Butadiene has increased. In the meantime, demand for Butadiene from other sectors like polymer (Acrylonitrile Butadiene Rubber) industries has remained moderate in the regional market.

On the supply side, operating rates have improved in the regional market while the ample material available on the European shores via the steady inflows of low import prices from the Asian market have resulted in the supply-dominant market. Furthermore, market players reported that no port congestion or supply chain bottlenecks were observed in the given time frame, thus leading to the smooth flow of cargo.

Therefore, as aforementioned reason, prices of Butadiene FD Hamburg were settled at USD 759/MT with a week-on-week decrement of USD 34/MT during the week ending 26th May.

As per ChemAnalyst's anticipation, Butadiene prices are expected to increase in the European market on account of the rise in demand from the downstream synthetic rubber and polymer industry. At the same time, cost pressure from the feedstock Ethylene may remain stable, which might result in the soft production cost of Butadiene.