Butadiene Prices Show Sharp Rise in Europe and Asia, Moderacy in the US

Butadiene prices have shown a bullish trend across the European and Asian markets during the first week of September 2023. The latest price increase was majorly attributed to high upstream pressure volatile energy prices and a revival in downstream demand. However, Butadiene prices have witnessed upward stagnancy in the US market amidst steady demand dynamics.

The ChemAnalyst database has shown that the prices of Butadiene have increased drastically in the German market. The feedstock Naphtha prices have continued to rise over the past few weeks, which positively impacted the production cost of Butadiene in the domestic market. On the other side, global crude oil prices are on the upswing, driven by anticipation of extended production cuts by OPEC+ nations, which pressurizes the price realizations of feedstock Naphtha prices to stay optimistic. As per the data, the Brent crude oil prices were settled at $88.55/ barrel with a weekly increment of 5.5% on 1st September. Moreover, there is an expectation that Saudi Arabia will continue to cut its oil production by another 1 million barrels until October, which will result in further supply restraints and potential price increases in the crude oil market, which afterward impact the prices of several commodities, including Butadiene. Despite the contraction in manufacturing activity and persistent inflationary pressure, the demand for Butadiene has recovered from the downstream synthetic rubber (NBR) industry has been translated into price gains for Butadiene. However, inquiries from other sectors, such as PBR, SBR, and the polymer (ABS) industry, were limited in the given time frame. Thus, prices of Butadiene FD Hamburg were settled at USD 621/MT with a week-on-week increment of USD 68/MT during the week ending 1st September.

On the other side, Butadiene prices have increased in the Chinese market as major manufacturer Sinopec has increased prices for Butadiene. The high-cost pressure from feedstock Naphtha, lifted by strong crude oil prices, has raised the production cost of Butadiene. Additionally, there has been a resurgence in inquiries from the downstream synthetic rubber and the polymer industry as the offtake from the end-user automotive sector has increased, which supported the prices of Butadiene to follow an uptrend in the domestic market. As per the China Passenger Car Association (CPCA) data, in August, China’s retail sales of passenger New Energy Vehicles (NEVs) in August were 698,000 units, up 32% year-on-year and 9% month-on-month compared with the previous month. Market players reported that the operating rates of several manufacturing firms, such as Liaoyang Petrochemical and Shenhua Ningxia Coal, remained steady. At the same time, the Shandong Weite Plant has continued to be shut down, and Zhejiang Petrochemical no 3 plants were off-stream amid maintenance turnarounds. Thus, the short-term supply side of Butadiene had a bullish influence. Therefore, prices of Butadiene CFR Qingdao were settled at USD 873/MT with a weekly increment of 4.4% during the same time frame.

However, Butadiene prices have showcased stagnancy in the US market with a marginal increment of 0.9%. The demand from downstream synthetic rubber and polymer industries has moderated, and market players reported few new inquiries. Furthermore, the inventories were enough in the domestic market despite the supply chain disruption brought on by Hurricane Idalia and the drought in the Panama Canal. Therefore, steady demand and adequate inventories stabilized the prices of Butadiene.

According to ChemAnalyst anticipations, Butadiene prices might increase globally due to high upstream prices. The demand from downstream synthetic rubber and polymer industries is likely to increase ahead of peak season while inventories are expected to deplete, which further raises the prices of Butadiene in the upcoming weeks.