In the first quarter, the domestic butadiene market prices rose strongly, and the domestic butadiene supply reduction coupled with the concentrated export of goods boosted the market atmosphere significantly, and the price rose to a near two-year high. However, due to the limited follow-up of domestic downstream demand, the market maintained a high and volatile trend in March, and the market continued to rise slightly weak. In the later stage, the price of downstream products is expected to follow up is limited, plus the supply side gradually weakened, butadiene prices or continued to rise weak, the second quarter or there is a certain downside space.
In the first quarter, the domestic butadiene market price rose strongly, and the average price increased significantly from the previous quarter. According to Zhuochuang information monitoring data show that in the first quarter of 2024, the average price of butadiene in Jiangsu and Zhejiang markets is 10,280 yuan/ton, an increase of 14.8%. The market price range in the quarter was 8550-11800 yuan/ton, with the low point appearing on January 9 and the high point appearing on March 18. The upward trend of market prices in January and February is obvious, mainly considering the decline in domestic butadiene supply, the existence of unplanned parking of some devices, and the centralized maintenance of domestic butadiene devices began in March, and the early digestion of maintenance expectations has boosted the market atmosphere. In addition, due to the limited supply of ocean cargo due to capacity problems in the Asian market, some butadiene devices in Southeast Asia were temporarily stopped in February, and some downstream manufacturers in South Korea and Taiwan, China, have certain spot purchasing demand. Domestic butadiene resources are exported in batches, resulting in a significant reduction in the domestic spot sales volume, and the strong trend of the US dollar has significantly boosted the domestic market.
Since 2022, the domestic butadiene market as a whole has maintained a volatile upward trend, and the market is in the repair period after the low point of the epidemic. The near three-year low was 4,325 yuan/ton at the beginning of 2022, followed by two lows at the end of 2022 and the end of June 2023, with prices at 6,450 yuan/ton and 6,000 yuan/ton, respectively. The three-year high is in mid-2022 and mid-late March 2024, with prices at 12,800 yuan/ton and 11,850 yuan/ton, respectively. In the first quarter of 2024, the high and low end of the price range is 8925-11850 yuan/ton, and the overall price is at a three-year high.
In the first quarter of 2024, the price of butadiene inside and outside rose simultaneously, from the point of view of the time node, first of all, the outside price rose earlier than the domestic market, followed by the middle of March, the outside price was higher than the domestic spot price. Under the influence of the price difference between internal and external markets, on the one hand, the higher price of external markets has significantly boosted the market in the valley, on the other hand, the export arbitrage window has been opened, and domestic merchants have been actively negotiating exports since February, and the market news has heard that the transaction price of goods delivered in May has reached $1450 / ton FOB China.
Looking back at the butadiene market situation in the first quarter of 2024, the pulling force of the supply side and the outer plate is more obvious, and in the process of the price going up, the profit of the industrial chain is concentrated in the upstream for a long time, and the downstream pressure is obvious. According to the statistics of Longzhong information, the theoretical gross profit of butadiene has gradually increased from the negative value in the second quarter of last year, and as of the first quarter of this year, the gross profit per ton has reached more than 3,000 yuan. But on the contrary, the main downstream product profits have been gradually compressed, and the theoretical gross profit of ABS products has maintained the inverted situation since August 2023. In the first quarter of 2024, the butadiene price is high, the downstream synthetic rubber profits are under obvious pressure, and the theoretical gross profit of the product is gradually upside down.
Prices rose strongly in the first quarter, but butadiene rose or lacked power in the future
A lack of downstream demand is a drag on consumption
In recent years, butadiene downstream of butadiene rubber, styrene butadiene rubber industry production capacity has increased slightly. In 2023, the main downstream consumption of butadiene will be about 3.5848 million tons, an increase of 10.50% from the previous quarter. In particular, the acrylonitrile - butadiene - styrene copolymer (ABS) industry 2023 annual consumption of less than 500,000 tons increased to about 880,000 tons, an increase of 33.19% in 2023, and in 2023 to rank butadiene downstream of the second largest consumer area.
In 2023, the profits of the main downstream butadiene industry as a whole rose and then fell, and the profits of the industrial chain gradually shifted to the upstream after September. According to the mainstream brand of upstream and downstream products and the main representative price data calculation, as of the end of December 2023, the ABS industry profits continued to be inverted for nearly half a year and the range was deepening, and even some of the time, the single-ton profit inversion range was as high as 1,000 yuan, which was difficult to support the butadiene market to continue to rise. The synthetic rubber industry ended its high-profit state since June 2023, and began to show an upside down state in November.
Affected by the difference in the profitability of the product itself, the capacity utilization rate of the main downstream products of butadiene was mixed. Due to the shift in supply and demand brought about by the rapid expansion of ABS, industry profits have been under pressure for a long time, and capacity utilization has fallen below 75%. Overall, with the gradual decline in the capacity utilization rate of the downstream industry, the consumption of raw material butadiene in the downstream industry has also declined.
Prices rose strongly in the first quarter, but butadiene rose or lacked power in the future
Supply support gradually weakened in the second quarter, and butadiene prices continued to rise under pressure
In the second quarter, the domestic butadiene market price or maintain a high downward trend, the supply side of the price support than the first quarter or weaker, while the downstream product price follow up limited, the impact on butadiene prices or amplified.
From the supply side, the number of domestic butadiene equipment maintenance decreased in the second quarter, Zhongshenghong and Liaoyang butadiene equipment restarted in April, and there were Zhejiang Petrochemical 2#, Zhongke Refining and Chemical, satellite petrochemical, Shanghai Petrochemical and Yanshan Petrochemical each set, Huajin, Dushanzi petrochemical butadiene equipment maintenance, overall, the amount of device maintenance loss decreased from the first quarter. And in the third quarter, the intensity of device maintenance continued to decline, and the intensity of market boost expected in the quarter or significantly less than in the first quarter. In terms of new devices, there is an expected output of 100,000 tons of butadiene equipment in Shandong Jincheng Petrochemical in the second quarter, which will supplement the spot circulation of the market to a certain extent. Overall, the domestic supply side of the price support than the first quarter or weakened.
In terms of demand, the number of downstream equipment planned maintenance devices in the second quarter is not large, in terms of synthetic rubber, the second quarter of domestic styrene butadiene rubber device only Li Changgrong (Huizhou) at the end of June to stop maintenance for 7 days around, some of the first quarter of negative production of styrene butadiene rubber devices in the second quarter or have a plan to return to normal operation. It is expected that the domestic styrene butadiene rubber production in the second quarter will increase by 1.28% compared with the first quarter. In terms of butadiene rubber, the overall number of device maintenance was significantly reduced from the first quarter, and the new device of 120,000 tons of synthetic materials is expected to be put into production in June, and the overall second quarter production may be increased. Synthetic rubber supply side increment or lead to price rise is still under pressure, but with the demand side increment, or there is a certain support for the lower end of butadiene price.
In terms of import and export, negotiations on the export of goods in May are still continuing, which may still boost the domestic market. However, with the arrival of some ocean-going cargo sources to the port in June, and the restart of some early parking devices in Southeast Asia, the export factor may be weaker in boosting the domestic market than in the first quarter. Under the continued high external price, the quantity of butadiene import sources may still maintain the contract, which is difficult to effectively supplement the domestic market.
On the whole, the favorable support of the domestic butadiene market in the second quarter may be weaker than the first quarter, and the high price is expected to decline. However, under the limited supply of imported goods and the expectation of certain recovery of demand, the price of butadiene may be limited. Considering the current butadiene price level, the overall average price level in the second quarter is expected to be slightly higher than the first quarter.