Butadiene Market Shows a Bullish Trend in Asia, While Prices Tumble in Europe

Butadiene prices fluctuated across Europe and Asian markets during the third week of July 2023. In the European market, Butadiene prices have inched lower on account of gloomy downstream demand along with sufficient inventories. Volatile energy prices, high inflationary pressure, along with rising interest rates have further weakened the market growth of Butadiene in the regional market. At the same time, Butadiene prices have increased in the Asian market, backed by high feedstock prices, although demand from the downstream industries remained steady in the region.

As per the ChemAnalyst, Butadiene prices have inched higher in the Chinese market during the third week of July 2023. The cost pressure from the feedstock Naphtha was sufficient as its prices progressed in an upward trend in the given time frame. In addition, the major manufacturer of Butadiene, Sinopec East China Sales Company, had raised the prices of Butadiene, which supported the current price trend. On the demand front, the inquiries from the downstream synthetic rubber (NBR, SBR) and polymer (ABS) industries remained stable to weak in the domestic market. The downstream procurement was mainly based on immediate requirements reported by market participants. As per the sources, China manufacturing purchasing manager's index was slightly improved in June (i.e., 48.8 in May to 49.0 in June) but still below bar performance, indicating a contraction zone. Furthermore, the closure of the Shandong Weite and Hangzhou Yibang units has had a beneficial effect on the immediate availability of Butadiene in the domestic market. Therefore, prices of Butadiene CFR Qingdao were settled at USD 712/MT with a week-on-week increment of 6.3% during the week ending 21st July 2023.

However, Butadiene prices have significantly decreased in the German market. The procurements from the downstream synthetic rubber and polymer industries have remained low to moderate and did not lead to an increase in the price realization of Butadiene in the domestic market. Furthermore, the firm inflation rates and consequent rise in interest rates to contain it heavily affected the demand fundamentals. According to the sources, Germany's inflation increased in June 2023 to 6.4% year-on-year from 6.1% YoY in May 2022. On the other hand, European Central Bank elevated eurozone interest rates to their highest level in 22 years in the previous month, and a ninth consecutive rise was estimated this month to bring the inflation down to the 2% target by European Central Bank (ECB), which might further pressure the purchasing power of the consumers. On the input energy front, Natural gas (TTF) prices have slightly increased in the European market amid a rise in demand for gas-fired generation, followed by weather conditions such as heatwaves and lower wind speeds across the region. Despite the rising demand and price raised, the natural gas stockpiles in Eurozone are currently at a significant level, with a storage facility of approximately 82.5% full. On the other side, cheap competitive offers from the Asian market have further weighed down the prices of Butadiene in the domestic market. Therefore, prices of Butadiene FD Hamburg were assessed at USD 510/MT with a weekly decrement of USD 90/MT on 21st July 2023.

According to ChemAnalyst anticipation, Butadiene prices are expected to increase in the Asian market due to the replenishment of inventories, while demand from the downstream synthetic rubber and polymer industries might improve in the region. At the same time, Butadiene prices will likely decrease in the European market back to tepid downstream demand. In addition, the inflation rate may increase, which might further impact the consumer's sentiments.