After entering March, butadiene prices in Asia are experiencing “cold weather†due to the dual impact of weak Chinese demand and abundant supplies. Currently, due to lower operating rates of downstream synthetic rubber producers, the supply of butadiene to the market is starting to show an excess. At the same time, as the market demand for butadiene in our country did not reach expectations, some traders who had previously picked up the goods had to sell at a lower price, which also led to a sharp drop in butadiene prices.
In March, Asian butadiene prices fell by 28.6% within a month. According to industry sources, the price of butadiene still has room for further decline.
Oversupply
According to data from ICIS Anxious, as of March 22, Asia's butadiene spot price has dropped to 1,500 US dollars / ton, compared with March 1, 2100 US dollars / ton price fell by 600 US dollars / ton, a decrease of 28.6 %.
A butadiene trader said that because some downstream synthetic rubber producers have shut down the device or cut down the operating rate of the device, there is an excess supply of butadiene in China, which will further pressurize the butadiene price.
According to industry sources, some Chinese synthetic rubber producers, including Huayu Rubber, Yanshan Petrochemical, Shandong Huayu and Fuxing Chemicals, have already shut down their installations or have reduced their operating rate to 50%.
As a result of the decline in the output of major downstream synthetic rubber producers, there was a surplus of butadiene, and prices fell sharply. ICIS Anxisi's data shows that on March 25, China's butadiene prices have dropped to 10,800 yuan to 1,1,500 yuan / ton, since March 1, the price has dropped by 3,500 yuan to 4,000 yuan / ton.
Due to weak earnings, some naphtha crackers, including the Korea Lichuan Naphtha Cracking Center and Formosa Petrochemical in Taiwan, have reduced the operating rate of crackers to 90%, and the operating rate in April will further increase. decline.
According to industry sources mentioned above, as some naphtha crackers have reduced the operating rate of the plant, the supply of butadiene will be reduced, which may prevent the butadiene prices from continuing to fall sharply.
Demand is weak
Another factor that caused the price of butadiene in Asia to suffer “cold weather†is that China’s demand for butadiene has not recovered “as expectedâ€. During the Lunar New Year holiday from February 9th to 15th, the Chinese butadiene market was closed. The market's expectation was that after the holidays were over, purchase intentions from China would grow strongly.
Based on this expectation, some butadiene traders have hoarded inventories, leading to short-term price increases in butadiene prices after the Spring Festival. However, China’s demand for butadiene has not recovered, far below the expectations of the market before it was fired. Traders who had previously hoarded butadiene had to sell at a reduced price.
Looking further downstream, the uncertainty of the market and the downturn of the global auto industry led tire manufacturers to adopt a very cautious attitude, thus inhibiting the buying desire of the butadiene market.
Synthetic rubber is mainly used for the production of automobile tires, and butadiene is the main raw material for synthetic rubber. Asia is the world's major tire production center. Goodyear, Bridgestone, Michelin, Kumho and Toyo Tire have production facilities in Asia.
A downstream synthetic rubber producer expects manufacturers to be reluctant to build butadiene stocks in the face of weak rubber demand. At the same time, there are too many butadiene cargoes on the market that are looking for buyers, so traders with butadiene stocks may be able to lower their prices to sell their inventory, and butadiene prices may fall further in April.
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