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Asian Butadiene Prices Demonstrate a Downward Trend Amidst Weak Demand

Asian Butadiene Prices Demonstrate a Downward Trend Amidst Weak Demand

Asian Butadiene Prices Demonstrate a Downward Trend Amidst Weak Demand

  • 19-Aug-2022 2:50 PM
  • Journalist: Henry Locke

The economic recession caused by Russia's invasion of Ukraine and China's COVID lockdown has slackened global growth. It has significantly impacted consumer sentiment during the first two quarters of 2022. Furthermore, the higher inflation rate in the United States and Europe has resulted in tighter financial conditions, fuelling uncertainty in the price of several commodities, including Butadiene. The tight monetary policies have exacerbated trouble in developing economies and emerging markets. According to the most recent data, the Asian Butadiene market has witnessed downward momentum for the past few weeks.

Butadiene price dynamics in the Chinese market have remained on the lower side, according to the ChemAnalyst database. The Butadiene market has shrunk significantly, and the price offered has dropped by double-digit figures on a week-on-week basis. On the upstream price front, Naphtha prices have fallen by around 1%, which has impacted the raw material Ethylene and Propylene costs, allowing Butadiene to follow the downward trend in the domestic market. Furthermore, increased stockpiles and weak demand have the other facets of Butadiene price declines in China's spot market. Moreover, the world's second-largest economy is suffering from economic ills caused by rising inflation in the region, which has been linked to the country's weak downstream domestic demand. Consequently, the prices of Butadiene CFR Shanghai were quoted at USD 1170/MT on July 12th. As per the market sources, significant manufacturers of Butadiene, Zhejiang Petrochemical, intend to raise the operating rate of its new 250,000 MT/year No.3 Butadiene plant in Zhejiang after mid-August, which will further alter the Butadiene prices in the Chinese market.

Meanwhile, due to low offtakes from the downstream synthetic rubber industries, Indian Butadiene prices have continued to fall in recent weeks. As a result, prices are offered at INR 123460/MT. At the same time, the downstream synthetic rubber industries in South Korea are reporting a drop in inquiries due to lower downstream plant operations. However, supply-chain disruptions in European countries pushed the German market to rise by nearly 2.3% on August 12th.

As per ChemAnalyst estimation, "Butadiene prices would continue to follow a declining trend in the Asian market due to bearish demand fundamentals from the synthetic rubber industries. On the raw material front, the tumbling Ethylene and Propylene cost will inflict the Butadiene cost in the upcoming weeks."

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