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Lacklustre Demand Plunges Butadiene Prices in China and Germany

Lacklustre Demand Plunges Butadiene Prices in China and Germany

Lacklustre Demand Plunges Butadiene Prices in China and Germany

  • 31-Oct-2022 3:36 PM
  • Journalist: Harold Finch

Butadiene prices have picked downward momentum across Asia and European markets during the week ending 28th October. Sluggish demand, shutdowns in China, amidst unchanged manufacturing cost remained the prime factors for the price fall.

As per the data, Butadiene prices have plunged by 6.0% and 6.3% in the German and Netherland markets, respectively, backed by decreasing production costs and improving supply chain conditions. As the natural gas prices have eased in the European market, for the time being, the cost of production for Butadiene has reduced, causing lesser upstream costs, eventually resulting in a reduction in its market prices. Although, according to the market sources, this decline in gas prices is only temporary, and the market would be in trouble once again when winters arrive, carrying increased demand for energy on its back.

On the other side, demand for Butadiene from the downstream synthetic rubber industries remained weak. According to the ifo Business Climate index has dropped from 84.4 points to 84.3 points in October, compared with the previous month. Furthermore, port congestions, vessel bunching, and yard occupancies have eased in the region and the supply chain has been operating normally. Consequently, leading to cheaper imports from the exporting counties which led to the better availability of the product in the regional market, eventually supporting the price drop.

In Germany, Butadiene prices (FD Hamburg) were assessed at USD 1301/MT in the week ending 28th October.

Similarly, in China, Butadiene prices have dropped by 1.5% during the previous week. Ongoing lockdown measures in some cities of China amid rising pandemic cases lead to uncertainties in production, operation, and logistics. This brings potential downward pressure to end-user demand. Further, China’s manufacturing activity contracted in October, and PMI shifted to 49.2, compared with the previous month. Hence, as a result, prices of Butadiene CFR Qingdao were settled at USD 791/MT during the same time frame.

According to ChemAnalyst estimation, “Butadiene prices are expected to continue the drop in the Asian market during the upcoming weeks. In Europe, the supply chain will improve, which may lead to a sufficient inventory level. On the other side, with growing concerns about the economy, potential recession, and high inflation, demand is expected to slow in the Chinese market.”

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