Despite tight supply, European Butadiene Prices Show Stagnancy in late May 2024

Hamburg, (Germany): In the last week of May 2024, Butadiene prices have shown an upward trend across the European market, supported by moderate demand dynamics coupled with tight supply. However, feedstock prices have remained low across the regional market, preventing a steep rise. The question now is whether the bullish market sentiments will continue in June 2024, or if the approaching holidays will drag down Butadiene prices.

According to ChemAnalyst's latest database, prices of Butadiene witnessed a marginal increase of USD 10/MT in the German market amid ongoing supply disruptions. Market reports indicated that material availability was low in the domestic market, as manufacturing firms have been operating at reduced rates due to external headwinds, prompting Butadiene manufacturers to slightly revise their offers. Additionally, the German Manufacturing Purchasing Managers' Index (PMI) was slightly up in May (45.4), though still below the threshold level of 50, which indicates growth in activity.

Moreover, outages at Total Energies' Gonfreville site and LyondellBasell’s Beere facility, with production capacities of 60,000 MT/year and 80,000 MT/year respectively, further contributed to the supply shortage in the domestic market. Consequently, prices of Butadiene FD Hamburg were settled at USD 1176/MT during the week ending May 31.

During the week, domestic demand for Butadiene from the downstream synthetic rubber industry, including NBR, PBR, and SBR, and the polymer (ABS) industry remained stable as consumption from the automotive and construction industries was largely moderate. Most market transactions were based on a need-on-demand basis. However, some downstream players in the synthetic rubber and polybutadiene rubber market anticipated higher demand for European products in the coming weeks following devastating floods in Brazil that impacted some synthetic rubber facilities.

Production costs have been lowered as feedstock naphtha prices have persistently declined in the domestic market. Nonetheless, this decline was insufficient to drive Butadiene prices lower. Thus, tight supply and stagnant downstream demand have supported the current price trend of Butadiene across the domestic market.

According to ChemAnalyst's forecast, Butadiene prices might rise in the coming weeks in anticipation of higher upstream values. Furthermore, material availability is expected to remain tight as operating rates are not projected to improve until the end of Q2 2024. Additionally, unfavourable weather conditions might hamper production and logistics activities across the European market. However, domestic demand for Butadiene is not expected to improve amidst the holiday lull. Some participants, however, expect an increase in overseas inquiries in June, which could further raise Butadiene prices.