For the Quarter Ending September 2024
North America
Throughout Q3 2024, Butadiene prices in North America experienced a consistent uptrend, particularly in the USA, where the most significant price changes were observed.
Various factors influenced this price rise, including strong demand from the downstream Synthetic rubber and Polymer industry, limited supplies due to operational constraints and production halts, and increased costs supported by rising feedstock Butane prices. These conditions created a positive pricing environment, with prices increasing by 106% compared to the same quarter last year.
In the USA specifically, prices saw a 2% increase from the previous quarter in 2024 and a notable 6% difference between the first and second halves of the quarter. This upward trend was driven by moderate demand, plant shutdowns, and supply chain disruptions caused by factors such as Hurricane Beryl. U.S. West Coast ports, including Los Angeles and Long Beach, had prepared for an influx of imports due to strong consumer demand and the potential for labor disruptions on the East and Gulf coasts.
APAC
In the third quarter of 2024, the Butadiene market in the APAC region experienced a significant decrease in prices. This decline can be attributed to a combination of factors such as muted demand from downstream industries, limited supply due to production halt, and decreased feedstock Naphtha prices. The market sentiment has been predominantly negative, with prices facing downward pressure throughout the quarter. Japan, in particular, witnessed the most significant price changes during this period. The overall trend in prices for Butadiene in Japan reflected the regional sentiment, with a strong correlation in the price changes. Compared to the same quarter last year, prices have decreased by 55%, indicating a substantial shift in market conditions. Additionally, the quarter-on-quarter decrease of 9% further highlights the downward trajectory of prices. The comparison between the first and second half of the quarter showed a slight decrease of 1%. Growing concerns about declining demand for energy commodities further placed downward pressure on prices. Additionally, the demand for Butadiene from the downstream Synthetic Rubber and Polymer sectors remained weak, with market participants reporting few new orders during this period. However, the supply of Butadiene stayed constrained due to low domestic operating rates and decreased import offers from Singapore and other exporting markets, though this had a minimal effect on Butadiene prices.
Europe
Throughout Q3 2024, the Europe region witnessed a notable upward trend in Butadiene prices, with the Netherlands experiencing the most significant price fluctuations. Several key factors contributed to this price surge. Firstly, supply constraints, stemming from reduced imports and low domestic production rates, tightened market availability. Additionally, rising freight rates and logistical challenges further pressured prices upward. Weak demand from downstream industries, such as synthetic rubber and polymer, contrasted with the limited supply, exacerbating the price increase.
Compared to the same quarter last year, Butadiene prices saw a substantial 72% increase, indicating a significant shift in market dynamics. Additionally, there had been a perception that the supply tightness would persist, as some plants were either shut down for unplanned maintenance or were expected to begin planned turnarounds before or during October. On the other hand, spot demand for Butadiene had increased, driven by replenishment activity ahead of the turnaround season in the upstream Naphtha market. Sellers had held a glimmer of hope for an increase in demand by the end of September and into October, which had helped ease concerns about weak buying interest.
For the Quarter Ending June 2024
North America
Throughout the second quarter of 2024, Butadiene prices have significantly risen across the US market supported by improved demand dynamics and limited inventories. The cost support from feedstock Butane was sufficient for Butadiene as its prices settled on the higher end, leading to bullish market sentiment toward Butadiene among the manufacturers. On the demand front, despite the high mortgage rates the inquiries from the downstream Synthetic rubber and Polymer industry have increased due to a rise in consumption from the construction sector, contributing to an upward shift in the price realization of Butadiene across the domestic market.
As per the market sources, new residential construction in the US rebounded in the month of April although the report also unexpectedly showed a continued decrease in building permits. Additionally, housing starts surged by 5.7 percent to an annual rate of 1.360 million in April after dropping by 16.8 percent to a revised rate of 1.287 million in March. On the other hand, consumer prices increased less than expected in April, suggesting that inflation resumed its downward trend at the start of the second quarter in a boost to financial market expectations for a September interest rate cut. In addition, the availability of Butadiene was limited due to low domestic production and slow imports from the Asian market which further uplifted the prices of Butadiene.
At the same time, Ocean freight rates from Asia to the North American west and east coasts have seen a notable increase, with rates rising by approximately 10%. This increase is in line with the general upward trend observed since the beginning of the month, keeping the prices upward. Thus, prices of Butadiene CFR USGC were settled at USD 1257/MT during June 2024. Meanwhile, the US Environmental Protection Agency (EPA) has reported that tightening emissions standards for Butadiene monomer at all plants in the US. This will likely increase costs and therefore drive up the Butadiene prices further.
Asia-Pacific
Butadiene prices have witnessed mixed sentiments in the Asia-Pacific market during the second quarter of 2024. During the first half of Q2 of 2024, Butadiene prices have inched higher in the Singaporean market supported by soaring energy and feedstock prices coupled with tight supply in the domestic market. The market player reported that the feedstock Naphtha prices increased throughout the past month which in turn resulted in the high production cost of Butadiene in the domestic market. On the demand side, the inquiries from the downstream Synthetic rubber mainly NBR, PBR, and SBR as well as from the polymer (ABS) industry have increased as consumption from the automotive and construction sector has recovered this week which lifted the prices of Butadiene in the domestic market. At the same time, the inquiries from the overseas market have also increased in an effort to restock the inventories, keeping the prices elevated. Furthermore, the operating rates have remained under pressure, resulting in the low material availability in the domestic market which supported the prices following an uptrend in the domestic market. However, Butadiene prices have declined in the second half of Q2 of 2024 owing to the weak cost support from the feedstock Naphtha. The demand from the downstream Synthetic rubber and Polymer industry has eased during the quarter as consumption from the key end-user automotive and construction sector was below seasonal expectations which weighed down the prices of Butadiene in the domestic market.
Europe
Butadiene prices have been on a firm note across the German market during the second quarter of 2024. Tightening supply conditions were the main driver behind the price rise, even though demand remained under pressure from economic challenges. However, feedstock Naphtha prices have been observed on the lower end throughout the quarter, though it had a minimal impact on the prices of Butadiene in the domestic market. In addition, the operating rates have remained low since Q1 of 2024 in response to a decline in downstream demand, leading to the limited availability of Butadiene in the domestic market. Additionally, outages at Total Energies’ Gonfreville site which has a Butadiene capacity of 60,000 MT/Year, and LyondellBasell Berre facility which has a capacity of 80,000 MT/Year, resulted in the supply shortage in the domestic market. At the same time, import prices have reached their highest levels as longer transit times and high shipping costs stemming from the Red Sea attack caused a series of notable hikes. Additionally, spot ocean freight charges from Asia to Europe surged well ahead of contract rates as vessel capacity tightened even more owing to the ongoing Red Sea crisis. As per the market sources, freight charges from Asia to North Europe were settled at $4,000/FEU, following adverse weather and congestion at Chinese ports. On the macroeconomic front, the annual inflation rate in Germany edged up to 2.4% in May 2024, compared to a three-year low of 2.2% in each of the previous two months. The firm inflationary pressure has further dampened consumer buying sentiments. However, the underlying demand for Butadiene from the downstream Synthetic rubber and Polymer industry was soft and stable amid the weak macroeconomic climate. Thus, as a ripple effect price of Butadiene FD Hamburg were settled at USD 1162/MT during June 2024.
For the Quarter Ending March 2024
North- America
Butadiene prices have been on a firm footing in the US market throughout the first quarter of 2024. This improvement is attributed to limited supplies within the domestic market. Supply concerns became prominent in the domestic market from mid-January onwards due to a force majeure declaration, plant shutdown, and reduced domestic operating rates. These factors, coupled with the impact of deep-freezing temperatures on Butadiene production, led to a supply shortage domestically.
Consequently, manufacturers in the Butadiene market adopted bullish sentiments. Simultaneously, imports from the European market were affected as Royal Dutch Shell, a prominent Anglo-Dutch oil and gas company, declared force majeure in early February regarding Butadiene supply to its facility in Norco, Louisiana, USA. Moreover, on the demand front inquiries from the downstream Synthetic rubber particularly from the SBR industry have improved as consumption from the automotive sector has increased in the domestic market which further pushed up the prices of Butadiene.
According to the National Automobile Dealer Association, Total Vehicle Sales in the United States increased to 15.81 million in February from 14.92 Million in January of 2024, boosting the demand dynamics of upstream raw materials, including Butadiene. However, the market players are optimistic that the demand from the downstream construction sector will escalate towards the end of the first quarter of 2024. Therefore, prices of Butadiene CFR USGC were settled at USD 831/MT during March 2024.
Asia- Pacific
Throughout the first quarter of 2024, Butadiene has persistently increased in the Singaporean market supported by soaring energy and feedstock prices coupled with tight supply in the domestic market. The market player reported that the feedstock Naphtha prices increased throughout the past month which in turn resulted in the high production cost of Butadiene in the domestic market. In addition, global crude oil prices were extending gains, with Brent crude hitting past the USD 91/barrel mark, fuelled by escalating geopolitical tension in the Middle East which could disrupt supply amid output cuts by OPEC and its allies. The strong crude oil prices have further positively impacted the overall production cost of Butadiene, leading to bullish market sentiments about Butadiene among the manufacturers. On the other hand, demand for Butadiene from the downstream Synthetic rubber and Polymer industry has remained stable throughout the quarter. Most market transactions were mainly based on a need-on-demand basis. In addition, purchasing activity from the overseas market has declined amid unfavourable economic conditions. As per the market sources, overall exports of chemicals and chemical products in March fell by 37% year on year to S$3.54 billion, reversing the 5.8% expansion in February. In addition, the operating rates have been steady as demand from the downstream industry has not fully improved in the domestic market. The material availability was observed on the lower end within the domestic market which further boosted the market sentiments of Butadiene. As a result, prices of Butadiene FOB Jurong were settled at USD 1265/MT during March 2024.
Europe
Butadiene prices witnessed hefty price increases across the German market throughout the first quarter of 2024. The cost side was one of the major drivers of the uptrend as feedstock Naphtha prices have continued to rise, leading to the bullish market sentiments of Butadiene among the manufacturers. On the upstream front, global crude oil prices have remained above $ 80 per barrel, indicating a tightening in the physical market amid ongoing OPEC+ production cuts and the prolonged rerouting of cargoes away from the Red Sea and Suez Canal. The high crude oil prices have further pressured the feedstock Naphtha prices to remain firm within the domestic market. Despite this, OPEC+ is not planning any policy changes in the upcoming joint Ministerial Monitoring Committee meeting. Meanwhile, geopolitical tensions in the Middle East and Russia are raising concerns about tighter supply. Players are closely monitoring these developments, alongside global economic struggles against recession and the Federal Reserve's potential rate cuts this summer. In terms of domestic production, for the past few quarters, manufacturing firms have been operating at reduced rates in the backdrop of challenging economic conditions across the domestic market. As a result of low operating rates, manufacturing firms have faced increased supply-side pressures due to the limited availability of Butadiene. Thus, foreseeing the limited supply and high production cost, promoted the Butadiene manufacturers to raise their offers, to gain some profit margins. On the other side, the demand from the downstream Synthetic rubber and Polymer industry was moderate throughout the quarter. Furthermore, buyers remained side-lined in anticipation of lower prices next quarter. Therefore, prices of Butadiene FD Hamburg were settled at USD 1026/MT during March 2024.
For the Quarter Ending December 2023
North- America-
Butadiene prices have drastically increased in the US market during the fourth quarter of 2023. The cost support from feedstock Butane was sufficient for Butadiene as its prices settled on the higher side in the domestic market. These led to the bullish market sentiments of Butadiene among the end-users. On the input energy front, the Natural prices have been observed on the higher end in the domestic market ahead of high demand. The Henry Hub spot prices increased 1 cent from $ 2.76 per million British thermal units (MMBtu) which proportionally impacted the production cost of Butadiene in the domestic market.
However, demand from the downstream Synthetic rubber (NBR, SBR) and polymer (ABS) has remained subdued as offtake from the end-user automotive and construction sector has been sluggish amid null season demand but it was insufficient to drive the price realizations of Butadiene at the lower end in the domestic market. The construction sector has slowed down as the housing market is rolling over from the weight of the Fed’s rate hikes along with high mortgage rates. Housing starts plunged 11.3% in August to a 1.28m rate down 14.8% from a year ago. In addition, the strike by the United Auto Workers (UAW) against the Big Three US automakers GM, Ford, and Stellantis that started on 15 September threatens to upend the sole bright spot for chemicals demand. While strike action at the Big Three is thus far limited to select plants, it is poised to further broaden if negotiations stall
Furthermore, the manufacturing firms were operating at low rates as demand from the downstream industry had not improved yet. Due to low production activities, the material availability was limited to cater to overall downstream demand which supported the prices to follow an upward trend in the domestic market. Moreover, the supply chain has been disrupted by the prolonged drought in the Panama Canal and the unrest in the Red Sea which in turn led to supply shortage in the domestic market. Overall, the continuous support from feedstock Butane was keeping the prices of Butadiene at elevated levels. Thus, prices of Butadiene CFR USGC were settled at USD 696/MT during December 2023.
Asia- Pacific-
Butadiene prices have witnessed mixed sentiments across the Asian market throughout the fourth quarter of 2023. During the initial and mid of Q4, Butadiene prices increased in the South Korean market as the inventory levels dropped in the South Korean market. This decline in inventories has culminated slight improvement in the prices as the market participants looked to seize upon the opportunity to negotiate better prices amidst limited availability. Meanwhile, the demand from the synthetic rubber and polymer industry has been declining but it was insufficient to drive the price realizations of Butadiene in the domestic market. Although, feedstock Naphtha prices have decreased it had a minimal impact on the prices of Butadiene in the domestic market.
However, towards the end of the quarter, Butadiene prices have inched lower in the domestic market. The feedstock Naphtha prices have decreased followed by weak upstream crude oil prices which in turn led to the low production cost of Butadiene in the domestic market. These led to the bearish market sentiments of Butadiene among the manufacturers.
In addition, demand for Butadiene from the synthetic rubber and polymer industry has remained tepid due to sluggish consumption from the end-user automotive and construction industry which weighed down the prices of Butadiene in the domestic market. Meanwhile, imports have turned cheaper which further led to low imported prices of Butadiene. Furthermore, the material availability was observed on the higher end which promoted the traders to clear out their inventories at low prices in the domestic market. Thus, as a result, prices of Butadiene CFR Busan were settled at USD 904/MT during December 2023.
Europe-
Butadiene prices have strengthened in the German market during the fourth quarter of 2023 supported by reduced supply within the domestic market. Although, feedstock Naphtha prices have decreased throughout the quarter, it had limited bearing over the prices of Butadiene in the domestic market. Additionally, the crude C4 market including Butadiene was tight amid ongoing planned and unplanned outages at European steam crackers. Moreover, Repsol's Tarragona cracker in Spain was the latest plant to go offline following a fire on Nov. 23, while Total Energies' Antwerp NC3 cracker and subsequent Butadiene production remained offline for planned maintenance which was due to end in early December, resulted in the supply shortage in the domestic market.
Meanwhile, imports from the Asian market have also become more expensive due to rising freight charges, which have further exerted upward pressure on Butadiene prices. Market sources indicate that the Shanghai Containerized Freight Index (SCFI) shows Asia-North Europe freight rates increasing by 9% to USD 925/TEU, while Asia-Mediterranean rates rose by 10% to USD 1,387 on December 8th. This marks the second consecutive week of growth for these rates. Furthermore, market participants anticipate that gains in Asia-Europe freight rates are likely to continue throughout January 2024.
However, market players reported overall consumption of Butadiene remained soft, weighed down by weak synthetic rubber (NBR, PBR, and SBR) and polymer (ABS) demand from the automotive and construction industry in the domestic market. This has been insufficient to drive Butadiene prices upward at the lower end of the domestic market. Therefore, prices of Butadiene FD Hamburg were settled at USD 772/MT during December 2023.
