For the Quarter Ending June 2021
As the Industrial Infrastructure recovered from the impact of winter storm Uri, Butadiene supply conditions improved compared to the previous quarter. Despite easing supplies, the regional market still witnessed short availability of Butadiene. Few BD producers in the US Gulf region were struggling to operate at normal run rates. US Butadiene Contract Price (CP) increased by 75% quarter-on-quarter. Demand remained exceptionally strong from the downstream rubber producers as the sentiment to replenish the inventories were strong among the spot buyers. Downstream NBR offtakes were consistent from the automotive sector even though the automobile production was hindered amidst the semiconductor chipset shortage. Butadiene pricing first inclined and then stabilized in the second quarter with FOB Texas discussion record to record highs at USD 1440 per tonne levels in May.
During the second quarter of 2021, the supplies of Butadiene remained balanced as the production rate at manufacturing plants were ample to meet the downstream end use demand. But some production lags were witnessed amid the May Day holidays in China. BD exports volumes were running low in South Korea, while some reported surged consumption of natural rubber as negatively impacting the market trend. Demand was consistent from the downstream SBR and ABS sector, backed by strong overseas enquiries from North American. Overall, the Chinese BD pricing was on downtrend with FOB Dalian prices declined showing a fall of 8.78 % quarter-on-quarter to USD 1828 per tonne by the ending of second quarter.
During the second quarter of 2021, Butadiene market reported mixed sentiments owing to the increased operating rates at several manufacturing facilities. However, the export demand from the USA put significant pressure on the European Butadiene market. Demand surged as most USA buyers preferred the European shipments over Northeast Asian cargoes due to lesser freight charges and high import duties by US government on the Chinese origin materials. Product offtakes surged from the downstream tire industries to meet the demand from recovering automotive sector. As a repercussion, the pricing trend in the European market remains supported by the tight supply and high demand.
For the Quarter Ending March 2021
BD supplies in the North American region remained affected early in Q1 2021 as major plants in the US ended their turnarounds in late January which increased their production efficiencies. However, disruptions caused by the severe freeze weather conditions forced several producers to halt the manufacturing activities. However, the demand surged from downstream sectors due to the anticipation of downstream producers to restock their inventories ahead of the upcoming high demand seasons. Amidst disrupted supply, April settlements were heard at higher rates. Butadiene FOB Lousiana prices were heard above USD 1000 per Mt in March, up from USD 900 per Mt levels noted in February.
The supply of Butadiene eased during the first quarter, owing to the addition of new capacities in China, further supported by the scheduled start up of 130 KTPA BD unit in South Korea. The addition of new capacities kept the domestic market amply supplied with greater spot availability of Butadiene during Q1 2021. However, the demand slumped in the region amid the second COVID wave resulting in partial lockdowns in several economies, followed by lack of offtakes amid Chinese Lunar new year holidays. In the Indian markets, prices witnessed an uptrend to quarterly average of USD 1244/ton amid the strong consumption from the downstream ABS and SBR sectors.
BD supplies in the European region were balanced during Q1 2021, as the major producers completed their turnaround period in early January. The demand surged from the downstream sectors. Due to the second lockdown largely impacting the European downstream market. The European BD industry, which is largely dependent on exports, specifically to the Asian region regarded strong buying appetite from the Asian countries.
For the Quarter Ending September 2020
Butadiene demand across Asia remained subjected to strong fluctuations hit by a possible decline in in the production at the downstream synthetic rubber market. Prices remained oscillating between crests and troughs as producers faced supply constraints amid dampened demand from the downstream synthetic rubber producers. By the end of August, spot BD prices in China surged to USD 830 per tonne, showing a double-digit increase from the start of the month. In the northeast Asia, spot BD offers were raised by about 17.5% from the levels observed in July, with producers striving to widen product margins amid players longing for a much-needed revival in the downstream rubber sectors. Market outlook remained under pressure amid anticipations that the Butadiene supply in China will grow with new capacities coming on stream in the fourth quarter. In September however, new supply hit the market as Liaoning Bora LyondellBasell’s plant started production of BD in the Liaoning province of northeastern China and started auctioning cargoes.
Butadiene supply remained mixed because of the resumption in downstream operations and unexpected outages created uncertainty over Product availability remained tighter because one of the largest BD producers, BASF Total, turned around its US Port Arthur, Texas steam cracker for a larger part of the quarter, thereby affecting the export activity. The resumption of several downstream Styrene Butadiene Rubber (SBR) plants and tyre manufacturing units after Hurricane Laura added to the production losses pressured the BD producers to ramp up run rates. The news of one of the largest BD consumers, INVISTA shutting its 480 KTPA Texas Adiponitrile site pressured the sentiments. As the US’ automotive sector started clawing back to recover the losses, demand picked up from August onwards, causing prices to register strong quarterly gains to assess around USD 685 per tonne FOB US Gulf in September.
Butadiene supply was weighed under the demand downturn at the start of Q3, but some unexpected C-4 cracker shutdowns helped in offsetting the market surplus. Towards the end of Q3, demand started to pick up the lost uptrend in line with increasing downstream tire and automobile production though producers remained wary about the overall recovery until the COVID-19 pandemic abated. Inventory levels were low as several synthetic rubber producers were able to ramp rates up. As per market estimates, the European market in Q3 was primarily driven by the buoyant demand from Asia which was heard turning more positive than in the last five months.