Butadiene market soared after the Spring Festival holiday, with prices jumping by around 9% to a record high since June 2022, as of February 26 of this year.
Affected by the shutdown of some units caused by routine maintenance or sudden failure, butadiene prices consistently moved higher since mid-to-late December 2023. The delivery prices were cited at Yuan 11,050-11,350/tonne in the central Shandong area, surged by 9.27% compared with February 9 (before the holiday), and in the meantime, self-delivery prices climbed by 8.59% to Yuan 10,700-10,800/t in Jiangyin.
Source: OilChem
Buoyed by surging butadiene prices, downstream synthetic rubber and ABS prices also presented uptrends, but the growth was more limited. In detail, compared with prices before the Spring Festival holiday, butadiene rubber (BR) price rose by 3.91%, styrene butadiene rubber (SBR) price grew by 2.36% and ABS up by 3.52% only.
Therefore, downstream industries faced shrinking profits. Among major downstream products, BR theoretical gross margin was around Yuan 1,000/t at early 2024 while turned negative since February, and ABS gross profit remained negative since mid-2023, hovering around Yuan -1,270/t as of the press time.
Source: OilChem
As tyre enterprises successively suspended trading for the Spring Festival holiday, end demand became sluggish, which led to a significant increase in the synthetic rubber inventory. In particular, according to OilChem, BR inventory grew by about 10,000 tonnes as of mid-to-late February.
Source: OilChem
In terms of butadiene industry, the market is projected to be supported by the short supply, because some goods will be shipped for exports in March, along with the coming of centralized unit maintenance.
As for downstream products, as butadiene prices surge to a nearly two-year high, the capacity utilization rate of some downstream industries may face a downward space, pressured by the high cost and inventory. Meanwhile, boosted by exports of semi-steel radial tyres, sporadic tyre enterprises successively raised prices, and follow-up changes in the end market remain to be seen.
Written by Cynthia Xin, xinyue@oilchem.net
Edited by Navy Liu, liuchuanjun@mysteel.com
