Butadiene Market To Perceive A Stagnancy In The USA And Chinese Market
- 04-Jul-2022 4:34 PM
- Journalist: Li Hua
In the USA market, Butadiene prices have witnessed a marginal increment of around 0.3% in the week ending 1st July. The high and persistent inflation is threatening the domestic market and inflating the commodity's values. Moreover, the supply chain disruption is starting to get to its worst part, further affecting the Butadiene market. However, the demand from the downstream tire, the plastic industry, has remained weak to stable, supporting the Butadiene prices to follow a stagnancy in the USA market.
Furthermore, the US market has been experiencing supply concerns since the inception of COVID; recently, the US government implemented a new law prohibiting the import of goods from Xianjing owing to forced labour. Also, the ongoing Russia and Ukraine war has resulted in the imposition of import and export sanctions on Russia putting the foundation to supply chain disruptions. As a result, the limited dispenses within the country resulted in poor availability of upstream crude and impeded Butadiene production, and the prices were settled at around USD 1790/MT compared with the preceding weeks. In addition, continuous inflation in the country as the Federal reserves have been imposing an increment in interest rates since 15th June 2022, which raises the price of upstream Crude oil prices. Consequently, the Butadiene market also sees a little hike following increased Crude values.
On the other hand, China's manufacturing activity increased, boosted by a strong rebound in output as COVID lockdowns have been lifted, sending factories competing to meet recovering demand. Also, the delivery times for suppliers stabilized amid easing supply chain snags. Though Chinese Butadiene market demand remains sluggish, dampened by the weak consumer activities resulting from the recession and tardy economy, most buyers attended to de-stock reflected by the tumbling global market situation. Additionally, the impact of global inflation, Russia's invasion of Ukraine combined with a mutated, highly infectious Covid-19 variant, which resulted in soaring energy and raw material costs, has sparked an economic downturn with orders shrinking in Q3. As a result, prices of Butadiene were quoted at USD 1550/MT with a marginal incline of 0.3% in the first week of June.
According to ChemAnalyst's estimation, "Butadiene prices will likely stagnate in the USA and the Chinese market in the coming weeks due to weak to stable demand from the downstream Elastomer segment. The purchasing activity across the regional market might prompt Butadiene prices. Nevertheless, the supply chain disruption may ease, and the production of the product could gain strength. In addition, upstream Crude oil value might show fluctuation amid emerging disruptions triggered by the Russia and Ukraine war."