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Global Butadiene Prices to Continue Their Bearish Rally Amid Weak Downstream Demand

Global Butadiene Prices to Continue Their Bearish Rally Amid Weak Downstream Demand

Global Butadiene Prices to Continue Their Bearish Rally Amid Weak Downstream Demand

  • 07-Oct-2022 3:46 PM
  • Journalist: Henry Locke

Towards the end of the Q3, the Butadiene prices continued their downward trend across the global market in the wake of sufficient inventory level coupled with sluggish demand from the downstream industries. Several factors, such as the stable production in exporting countries like Singapore and USA, the high global inflation rate, and mounting energy prices in Europe, have hindered the market growth of Butadiene.

As per the data, Butadiene prices have continued to drop in the Asian market during the week ending 30th September 2022. Ample inventory level coupled with weak demand from the downstream industries has supported the Butadiene prices to follow the downtrend across the regional market. In South Korea, manufacturing activity slowed down in September amid weakening global demand. Also, Purchasing Manufacturing Index plunged from 47.6 to 47.3 during September. In addition, inflows of the new order have slumped, reflecting low inquiries from both the domestic and international markets. Similarly, Japan's PMI Index dropped from 51.5 to 50.8 in September 2022. On the other side, inflationary pressure also accelerated at the end of the third quarter. As a result, in South Korea price of Butadiene was offered at USD 990/M.T. in the previous week.

Since the beginning of the Russia-Ukraine war, natural gas prices have been a major cause of concern, and Europe has still been battling high gas prices. The rise in Natural gas prices has boosted electricity prices, thus dramatically increasing the overall cost of production. Rising production costs amid weak demand have prompted Butadiene manufacturers to drop their operating rates. Meanwhile, cheap imports from the Asia Pacific and North American region countered Europe's decline in production rates amid energy crises. Furthermore, the speculation of recession across the European countries has stifled the demand from the downstream synthetic rubber industries. As per the Eurostat data, the inflation rate in Europe has around 7.9% during August 2022. Hence, as a result, Butadiene prices have dropped by 4.5%, 2.6%, and 4.6% in the Germany, Belgium, and U.K. markets, respectively, during the same time frame.

Meanwhile, in the USA market, the combination of excess inventories and a decline in consumer demand has negatively impacted the prices of Butadiene in the domestic region. The U.S. shippers have witnessed a 20% drop in ocean freight orders amidst the demand curtailment across various sectors, including the Synthetic rubber industries. Thus, prices of Butadiene FOB UGSC were offered at USD 2292/M.T. on 30th September 2022. 

According to the ChemAnalyst estimation, "Global Butadiene prices will follow the downward trajectory in the upcoming weeks due to further decline in demand from the downstream industries."

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