Butadiene Prices declined in China and the USA, While Prices Strengthened in Europe
- 02-Sep-2022 4:46 PM
- Journalist: Timothy Greene
Prices of Butadiene have shown variable trends across the globe. The increased inflation rates and adverse currency trends have crushed consumer sentiments and created enough pressure on the manufacturing index of several commodities, including Butadiene. Despite this, demand from the downstream sector has dampened.
With record heat waves causing a surge in electricity consumption in China, manufacturing activity has halted again in the country as repeated Covid-19 outbreaks took a toll on the economy, and high-power demand, triggering factory shutdowns across the region. On the other hand, the zero-covid policy and inflation have harmed consumer sentiments. According to the latest data, Chinese Butadiene price continues to weaken by the shrunk demand from the downstream automotive and construction industries. On the raw material front, fluctuation in the upstream Crude and Naphtha value has inflicted the raw material Ethylene and Propylene prices, which has further supported the Butadiene to follow the downward trend in the domestic market. Hence, as a result, Butadiene prices were offered at USD 1110/Tonne in the preceding weeks. In addition, the major manufacturer of Butadiene Shandong Weite Chemical in Shandong, China, has a capacity of 100,000mt/year, and Petro China Liaoyang in Liaoyang, China has a capacity of 300,000, has shut down its manufacturing plant due to maintenance turnaround, which further impacted the Butadiene prices in the domestic market.
On the other hand, in the USA, similar market sentiments have been observed. Sluggish demand from the downstream automotive and construction sector has resulted in the price drop of Butadiene. Moreover, the supply chain has been disrupted amidst port congestion and worsening logistics and supply activities in the US market. Hence, as of result, Butadiene prices plunged by 4.0% in the preceding week. In addition, ease in the inflation across the US market has also impacted the Butadiene prices.
At the same time, in Germany, prices of Butadiene have gained upward momentum, though the downstream demand from the automotive industry is still weak. The primary factors for the price increase are the disrupted supply chain, low operating rates, and limited inventory levels. According to ifo, the Business climate index fell from 88.7 to 88.5 in August, compared with the previous week. On the supply front, the low Rhine water level, coupled with labor unrest and strike, has worsened the logistics and supply chain activities, and cargos are still congested at the seaports in the European ports. Apart from sea freights difficulties, obstructions in road freight have been hitting Germany. Germany mainly imports Butadiene from European countries such as Belgium and the UK by road. Though, shipping through roads is also getting frozen due to scarcity of trucks amid AdBlue and labor shortages.
According to ChemAnalyst, prices of Butadiene will further follow a downward trend in the Chinese and USA market due to weak demand from the downstream automotive and construction industries. Meanwhile, the price will increase in Germany Butadiene as supply chain disruptions will likely affect Germany in a few more weeks."