Butadiene market ‘heading for years of subdued pricing’

London – Butadiene prices look set to soften significantly over the next two years at least amid a spate of new capacity additions and declining growth in demand.

That’s according to Bill Hyde, vice president olefins and elastomers at Chemical Market Analytics, who see a “huge oversupply situation” emerging in global butadiene market.

“There's been a tremendous amount of capacity additions [scheduled] in over the next couple of years,” Hyde said at the recent AGM of the International Institute of Synthetic Rubber Producers (IISRP).

These developments are set to the drive ‘cumulative capacity surplus’ above the 1,500 kilotonnes per annum (ktpa) mark in 2023, Hyde’s presentation at the event in Estoril, Portugal showed.

This level of imbalance is forecast to persist into 2024 with the gap between supply and demand then narrowing steadily but substantially over subsequent years to 2030.

China is currently at the centre of new butadiene capacity additions, with over 600ktpa being added in 2022, almost 500ktpa due to come on-stream next year.

Projects elsewhere in northeast Asia and other world regions will add further to butadiene production capacity this year and next. 

In terms of pricing, Hyde noted that butadiene had been on an upward path following a dip in pandemic-hit in 2020 to around 20% of a 2011/100% reference level.

But, having recovered back up to 60% of the reference this year, butadiene prices are forecast to dip to 40% of that level by 2024 and then flatline for the next couple of years at least.

The scenario, said Hyde, will mirror a more general trend in which overcapacity will be a “key driver” throughout the petrochemical sector over the next few years.

We will report further on this topic in the Nov/Dec issue of European Rubber Journal magazine.