Chinese Butadiene Negotiations Rebound After a Week's Decline Here's Why

Mumbai, India: Butadiene prices have witnessed a trend reversal in the Chinese market. The price of Butadiene changed little as it fell on 13th May and later rebounded in the current week. Butadiene prices declined steadily at the start of the week before climbing.

The primary cause of the price drop is a sluggish market sentiment in which Demand for Butadiene has decreased, and manufacturers were heard offering the product at a discount, as evidenced by lower spot market pricing. Even though the price decline has obstructed manufacturers' profit margins, manufacturers still enjoy a considerable profit margin of more than 50%. As per ChemAnalyst, prices of Butadiene declined by 1% in the week ending 13th May.

On the other side, demand from the downstream Elastomer segment remained bearish, have weighed down on the Butadiene prices.

Traders based in Mumbai revealed to ChemAnalyst that the shipping volumes are decreasing. Some domestic facilities have just reopened. As a result, positive support from the supply side dwindled—the terminal's capacity to transport shipments at higher costs. The downstream entered the market to see and wait, making cautious purchases and weakening the bargaining environment.

Furthermore, Plants that were temporarily shut down for maintenance were now restarted because of the current market condition, which impacts the Butadiene prices in the Chinese market.

However, as per sources, the prices of Butadiene were inclined by 2% this week owing to the rising raw material cost, including Ethylene, and limited supply. Furthermore, another factor that influenced the prices of Butadiene was the increasing demand from the end-user Tire industry.

According to ChemAnalsyt, Butadiene prices are projected to climb in the Chinese market in the upcoming weeks due to further rising demand from the downstream Elastomer segment. Additionally, production cost and trade activities might have a negative impact on the Butadiene cost. Meanwhile, crude oil prices are forecasted to surge, which might affect the feedstock Ethylene cost.