Butadiene Market Continues to Have Bearish Sentiments Across the Globe

Butadiene prices have continued to follow the downtrend across the Globe during the third week of November 2022, supported by the tumbling in energy prices, lackluster demand, adequate material availability, along with uncertainties in China. 

According to the data, prices of Butadiene have plunged by 2.0% in the Chinese market. Market participants reported that the downstream inquiries from the synthetic rubber and plastic industries were gloomy, raising the pressure on the existing inventories. The continued decline in demand dragged down Butadiene market sentiments. Despite this, Beijing's "zero-Covid" policy has caused logistics disruption and a drop in ocean shipment volumes. In conclusion, prices of Butadiene CFR Qingdao were assessed at USD 732/MT during the preceding week.

At the same time, in the Japanese market, manufacturing activity contracted in November 2022 as demand worsened due to strong inflationary pressure. As per the data, PMI dropped from 50.7 to 49.4 in November 2022, compared with the previous month. Also, the inflows of new export orders have declined amid weak consumer sentiments. Hence, prices of Butadiene plummeted by around 2.1% on 18^th November 2022.

Similarly, in the European market, Butadiene prices have declined by 6.4%, 6.6%, and 6.8% in the Belgium, German, and Netherlands markets, respectively. Continual weak cost support, stability in energy prices, and cheaper Asian imports have resulted in another drop in prices. Meanwhile, natural gas prices have shown a marginal change as the prices as the winter season moves toward their peak. Furthermore, demand from downstream synthetic rubber and plastic industries has been stable to weak amid soft buying sentiment in the European market. Despite this, German economic sentiments have improved compared to the previous month, which could allay immediate fears of a global recession. According to ifo, the Business climate index increased from 84.5 points to 86.3 points in November 2022. As a result, prices of Butadiene FD Hamburg were offered at USD 1072/MT.

Furthermore, given an adequate supply to meet the overall produced demand, Butadiene prices remained stable in the USA market. Regular consumer purchasing patterns and an exact balance between supply and demand dynamics were seen, maintaining the Butadiene price where it was. Additionally, there was almost no variation in the offtake from the end-user industries, which caused the price of Butadiene to roll over.

According to ChemAnalyst estimation, "the rebound in the synthetic rubber and plastic industry can raise the market fundamentals of Butadiene. Although anticipating the current economic situation, the prices of Butadiene will expect to continue their bearish rally across the Globe amid dropping in the upstream prices and a deterioration in the supply chain in the upcoming weeks".