
Undersupply fuels sentiments in H1 2022
China’s BD output grows with startups coming on stream in Q3 2022
European suppliers sell BD in Asia in Q4 2022
Butadiene prices have been varying widely from $600/t CFR NEA up to $1,600/t CFR NEA in 2022 to reach the year's high in H1 June amid tight BD supply and healthy regional and overseas demand. In 2021, they were ranging from $610/t CFR NEA to $1,600/t CFR NEA, showing the similar scenario with a steady uptrend by summer and a steep decline during autumn.

In Q1 2022, BD prices were spiralling up because of lower BD production and strong overseas interest in the regional material. A reduction in cracker operating rates in view of poor olefins sentiments led to lower BD availability. Those producers that had to cut utilisation were looking for the regional BD to cover output losses and meet long-term obligations. Besides, demand from US customers was healthy, which prompted Asian suppliers to boost shipments there. So, South Korea’s exports to the USA rose by 25,700 t to 33,400 t in Q1 2022 versus Q1 2021*.
Undersupply was bolstering the Asian BD market throughout Q2 2022. Margins for olefins production remained low, so most producers continued running their units at reduced rates, consequently, cutting BD output. A decline in imports contributed to a depletion of regional stocks. China’s supplies from abroad went 17,700 t down to 30,800 t in Q2 2022 versus Q2 2021 due to a drop in shipments from Singapore and Taiwan**. South Korea reduced imports by 39,500 t to 72,800 t in the same period*.
After prices peaked at $1,600/t CFR NEA in H1 June, they started tending downwards. In Q3 2022, supply was growing with the commissioning of three Chinese units with the total annual capacity of 480,000 t. On the other hand, regional interest began weakening in Q3 2022. BD became unaffordable to most downstream producers amid squeezed or even negative margins, so they withdrew from the market. Logistics were severely disrupted on lockdowns in East China. Some end users found themselves overstocked and had to decrease production.
Supply has been outpacing demand in Q4 2022. Although weak performance in polymer markets forced Asian producers to either cut output or keep crackers shut for prolonged repairs, regional customers have hardly suffered from the BD shortage. Several downstream makers have either lowered run rates or overhauled their units in Q4 2022. Demand was even worse in Europe. Given a slowdown in domestic downstream industries and limited buying interest from the US players after the heavy cargo flow fixed previously from everywhere to the USA, suppliers had to look for other outlets for European BD outside the region. Sporadic demand in China made them sell BD in Asia. Thus, a Chinese rubber manufacturer bought 7,500 t of European BD at $750—760/t CFR China for H2 December delivery. According to shipbrokers, Thekla Schulte vessel loaded the lot in ARA in end-November.
In 2023, the prices may increase and fall, keeping a structure seen in the last couple of years. Sentiments may lack upward drivers in Q1 2023 as supply is expected to grow with a few new BD units launching and demand may stay tepid on the typical slowdown amid the Lunar New Year. BD may start appreciating due to preparations for a spring TAR season. In Q2 2023, the heavy season of repairs to crackers is likely to reduce olefins output, including BD one. Besides, BD consumption may rise as a few downstream startups will come on stream. Sentiments may slacken in Q3 2023 on slower activities in summer. However, downstream markets may witness some recovery owing to the complete lifting of lockdowns in China expected in H2 2023.
Please be sure to contact Chem-Courier team for access to our market intelligence to keep up with the latest news from the Asian BD market in 2023.
*According to Korea International Trade Association (KITA)
**According to General Administration of Customs of People’s Republic of China