According to the Commodity Market Analysis System of Shengyi Society, the average price of domestic butadiene market at the beginning of 2024 is 8875 yuan/ton, and the average price at the end of the year is 10800 yuan/ton, with an annual increase of 25.95%. The overall trend of the butadiene market in 2024 will first rise and then fall, basically divided into two stages. In the first half of the year, it will fluctuate upwards, and in the second half, it will fluctuate downwards before rising again.
From the monthly K-bar chart of Shengyi Society, it can be seen that the butadiene market in 2024 will have more ups and downs, with 9 months of upward movement and 3 months of downward movement. The highest increase was 15.37% in June and the highest decrease was 21.1% in November.
Note: The K-bar chart of commodity prices, using the concept of price trend K-line, reflects the weekly or monthly price changes in the form of a bar chart. Investors can make buying and selling investments based on the changes in the K-bar chart. Red indicates an increase; Green indicates a decline; The height of the K-pillar represents the range of rise and fall.
1、 Review of the Butadiene Market in 2024
First half of the year: Supply shortage increased by 59.77%
In the first half of 2024, the price of butadiene rose strongly, steadily increasing in January and February, fluctuating at a high level in March and April, briefly rebounding in May, and significantly increasing in June, reaching a new high for the year. The main factor driving the market trend throughout the first half of the year was still tight supply. In terms of domestic facilities, due to continuous losses in cracking units, the overall operating rate of cracking units was low in the first half of 2024, and some butadiene units were unplanned to shut down after June, resulting in overall tight supply of butadiene in the first half of 2024. The downstream rubber market on the demand side is generally stable, providing good support for butadiene demand. Overall, driven by tight supply, the butadiene market saw an overall upward trend in the first half of the year.
Second half of the year: Weak demand, down 21.17%
After entering the second half of the year, the butadiene market first fell and then rose from July to September, followed by a wide decline from October to November, and then rose again in December. After entering July, the price of butadiene remained at a high level, and the downstream high receiving capacity was insufficient. The market demand remained lukewarm, which limited the support for market atmosphere and dragged down market quotations. After August, due to the tight supply in the spot market in the northern region, the butadiene market began to recover and rose back to its highest point of the year. After entering October, although there was some demand for replenishing inventory in the post holiday market, which partially boosted the market, the downstream synthetic rubber market weakened, dragging down market purchasing sentiment and lacking demand support. The spot market sentiment was weak, and prices generally declined. After entering November, due to the dual impact of increased supply and weakened demand, the butadiene market rapidly fell, with a monthly decline of over 21%. After entering December, the butadiene market began to recover due to the tightening of market supply and the strengthening of downstream synthetic rubber markets.
2、 Outlook for the Butadiene Market in 2025:
Cost side: The 2025 oil price range is fluctuating, and the cost side support is relatively stable
The International Energy Agency predicts that by 2025, under the premise of maintaining the current level of production policy in OPEC+, global oil supply will show a surplus of over 1 million barrels. Business Society believes that based on the current production capacity and the premise of moderate growth in US crude oil supply in the future, it is expected that the supply-demand balance in 2025 will transition from a tight equilibrium state to a balanced state; In addition, considering that there are currently no more intense conflicts in the geopolitical foundation, as well as factors such as risk premiums, the upward range of oil prices in the future may be suppressed. Therefore, Business Society predicts that the average Brent oil price in 2025 will generally fluctuate within the range of $73-76. The overall cost support for the butadiene market in 2025 is relatively stable.
Supply side: Expected increase
In 2024, China’s butadiene production capacity will be 6.697 million tons per year, an increase of 150000 tons compared to 6.546 million tons in 2023. According to statistical data, China’s butadiene production capacity plan is expected to increase by about 1.2 million tons in 2025. Based on this amount, China’s butadiene production capacity is expected to reach 7.89 million tons per year by 2025. At present, the top three companies in the domestic butadiene industry in terms of production capacity are Zhejiang Petrochemical, CNOOC Shell, and Zhenhai Refining, with production capacities of 700000, 350000, and 325000 tons per year respectively, accounting for 11.36%, 5.68%, and 5.28% of the total production capacity, respectively. With the continuous investment of subsequent production capacity, the domestic supply of butadiene will be alleviated. The market predicts that crude oil prices will continue to fluctuate at a high level in 2025, leaving room for profit growth in refineries and ethylene cracking. Under this influence, it is expected that butadiene production will increase to some extent in 2025, and market supply will gradually ease.
According to customs data statistics, the total import volume from January to November 2024 was 378000 tons, a year-on-year decrease of 0.36%. In November 2024, the import volume of butadiene in China was 69800 tons, a month on month increase of 29.32% and a year-on-year increase of 198.11%. The import volume of nearly 70000 tons in a single month reached a new high since July 2020.
Demand side: Stable with upward trend
In the consumer sector, the core raw material for synthetic rubber is butadiene, and synthetic rubber produced from butadiene accounts for over 80% of the total production of synthetic rubber. Therefore, from the perspective of consumption structure, both butadiene rubber and styrene butadiene rubber account for 30% of butadiene consumption, ABS accounts for 12% of butadiene consumption, latex and SBC account for 9% of butadiene consumption, and nitrile rubber accounts for 5%. By 2025, the newly added production capacity of the four major downstream industries will be around 2.5 million tons, which still provides some support for the butadiene market.
Market forecast:
In the short term, due to the impact of the Spring Festival holiday in January, there is generally a demand for pre holiday stocking in the downstream market. At the end of December, the butadiene market has already experienced a wave of upward trend, boosted by tight supply. Under the influence of downstream demand after January, it is expected that there is still some upward space.
In the long run, a number of new facilities have been put into operation in China since the fourth quarter of 2024, mainly distributed in Shandong, Guangdong, Jilin and other places. Especially in Shandong Province, it is expected that about 500000 tons of new facilities will be put into operation in the future. After entering 25 years, these production capacities will gradually be released, and the tight supply situation in the domestic market will be alleviated to some extent. In terms of demand, downstream synthetic rubber enterprises will also release new production capacity in the future, and there is a good expectation for demand for butadiene. Overall, the shortage of supply in the butadiene market will be alleviated in the future. As a result, there is limited room for further growth in the butadiene market, but downstream demand still has support. It is expected that the butadiene market will continue to maintain a high volatility trend, with a focus on the operation of the downstream synthetic rubber market in the future.
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