Butadiene prices in April may further decline

Butadiene prices in April may continue to fall as oversupply and weak demand put further pressure on the market. Currently, lower operating rates at downstream synthetic rubber producers have led to an increase in butadiene supply, creating a surplus in the market. At the same time, demand in China did not meet expectations, prompting traders who had previously purchased inventory to sell at reduced prices, contributing to a sharp decline in butadiene prices. In March, Asian butadiene prices fell by 28.6% within a single month, according to industry sources, and there is still potential for further price declines. As of March 22, spot butadiene prices in Asia dropped to $1,500 per ton, down from $2,100 per ton on March 1 — a decrease of $600 per ton, or 28.6%. A local butadiene trader noted that several downstream synthetic rubber producers have either shut down their facilities or reduced production capacity, leading to excess butadiene supply in China. This surplus is expected to continue pressuring prices downward. Industry reports indicate that major Chinese producers, including Huayu Rubber, Yanshan Petrochemical, Shandong Huayu, and Fuxing Chemicals, have already cut their operating rates to as low as 50%. This has contributed to a significant oversupply, causing a steep drop in butadiene prices. According to ICIS Anxi data, Chinese butadiene prices fell to between 10,800 and 11,500 yuan per ton by March 25, down by 3,500 to 4,000 yuan per ton since the start of March. Meanwhile, some naphtha crackers, such as Korea's Lichuan Naphtha Cracking Center and Formosa Petrochemical in Taiwan, have reduced their operating rates to 90%, with further cuts expected in April. These reductions could help stabilize supply and potentially slow the pace of price declines. Another factor affecting the market is the lack of demand in Asia. Following the Lunar New Year holiday from February 9 to 15, the Chinese butadiene market was closed. Traders anticipated a strong rebound in purchasing activity after the break, leading some to stock up on inventory, which temporarily pushed prices higher. However, demand did not recover as expected, falling well below pre-holiday forecasts. As a result, traders who had built up inventory were forced to sell at lower prices, exacerbating the downward trend. Looking further downstream, uncertainty in the market and a global auto industry slowdown have made tire manufacturers cautious, reducing their appetite for butadiene. Since synthetic rubber is primarily used in tire production, and butadiene is a key raw material, this has significantly impacted demand. Asia remains the world’s largest tire manufacturing hub, with companies like Goodyear, Bridgestone, Michelin, Kumho, and Toyo Tire operating in the region. With weak demand for rubber, downstream producers are unlikely to build up large inventories of butadiene. Additionally, the market is flooded with available butadiene cargo, making it difficult for traders to find buyers. As a result, many may be forced to lower prices to offload their stocks, potentially leading to further declines in April.

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