High Upstream Values Driving Butadiene Market in China

Rising crude oil value due to Russia-Ukraine war has negatively squeezed the overall market dynamics for all commodities, notably, Butadiene across the Chinese market during the past few months.

As per the latest insight, upstream crude oil prices have been edging higher on an expected demand recovery in China, as the world's largest economy has been returning to normal in recent days after two months of painful shutdown to stem outbreaks of the Omicron variant.

As per ChemAnalyst's analysis, the market trend of Butadiene showcased an upward momentum in the Chinese market in the previous weeks, backed by the soaring cost of feedstock.

Furthermore, the Butadiene prices bolstered after the dragon boat festival holidays due to the low inventory levels and high demands. The slow destocking activity and the reduced production resulted in the commodities shortage in the local market, further prompting the Butadiene pricing.

However, Butadiene is the direct derivative of crude, and the rising crude prices directly impact the Butadiene costs. Also, price pressures continued to plague local manufacturers as supply constraints led to higher input costs, and firms had no choice but to increase selling prices.

On the other side, the demand for Butadiene from the downstream Elastomer segment increased in the domestic as well as regional markets.

Furthermore, traders revealed that consumer consumption met a bullish trend after the dragon boat festival break. As a result, Butadiene price inclined by 1.4% in the preceding week.

Moreover, the export cost from Malaysia increased in accordance with the raw material price increase, notably, Ethylene coupled with the Labour shortage. Besides, the growing downstream automotive and plastic industries require Butadiene in a huge amount, which is utilized in manufacturing synthetic tires, which has fuelled up the high pricing of Butadiene.

According to the ChemAnalyst, prediction, "Butadiene prices are likely to increase in the forthcoming weeks due to the further escalating upstream crude prices. Low inventory levels and strong buying sentiments from the downstream sectors are projected. Moreover, the high maritime cost is expected, which will inflict the Butadiene pricing in the Chinese market".