Butadiene Price Shows Downtrend in the Asia and European Markets at the Commencement of Q2 2023

Butadiene prices have showcased a downtrend across the European and Asian markets during the first week of April 2023, backed by the low-cost pressure from feedstock prices. Stable demand dynamics, along with firm inventories in the region, growing fears of a recession in the wake of the failure of key banks in America and Europe coupled with aggressive rate hikes of central banks to tame inflation, have further obstructed the pricing sentiments of Butadiene. Furthermore, a major manufacturer of Butadiene in China has restarted their production units which will improve the supplies in the regional market.

Butadiene prices have inched lower in the Chinese market because of weak cost pressure from feedstock Naphtha prices. Operating rates remained moderate in the domestic market due to stagnant consumption from both the domestic and overseas markets. Meanwhile, steady imports from neighboring Singapore and Japan have led to better materials available in China's domestic market or ports. However, market participants reported that the trading capacity between China and South Korea (exporter) is under pressure, which may further affect the overall market prices in the next few weeks. On the other side, demand for Butadiene from the synthetic rubber industries has remained constant in the domestic market while sufficient supplies to cater to the overall demand. Moreover, a major manufacturer of Butadiene, Sinopec Zhenhai Refining and Chemical in Zhenhai, Zhejiang, China having a production capacity of 165,000 MT/ year, has restarted its plant, which is expected to increase supplies in the regional market. Thus, prices of Butadiene CFR Qingdao were settled at USD 1102/MT with a week-on-week decrement of USD 46/MT during the week ending 7th April.

Similarly, Butadiene prices in the French market have declined by USD 14/MT due to balanced demand and supply. Additionally, upstream natural gas prices have decreased, resulting in lower production costs of Butadiene in the domestic market. However, the cheap imports from the Asian country have further weighed down Butadiene's prices. Furthermore, France is facing mass protests and strikes in response to the contentious pension reform plan, which has hampered the supply chain in the domestic market. However, due to steady demand and ample inventories in the market, it has not significantly impacted the market at a broader level. However, demand from the downstream Styrene Butadiene Rubber (SBR) and Polybutadiene Rubber (PBR) industries has slightly increased as consumers show better interest in buying electric vehicles. The operational rate in the market is modest, enough to cater to overall domestic demand. Consequently, Butadiene prices FD Le Havre settled at USD 954/MT during the same time frame.

According to ChemAnalyst, "Butadiene prices will likely rise in the Asian and European markets in the coming month of 2023 due to rising end-user demand". Further, upstream energy prices may increase in the respective market, which will impact the pricing dynamics of Butadiene in the coming weeks".