Price Trend

In August 2019, the market of butadiene rose sharply. Business Association monitoring showed that the price of butadiene was 9045 yuan/ton at the beginning of the month, and 10 277 yuan/ton at the end of the month. The price of butadiene rose by 12.96% in the month. Prices fell by 24.14% over the same period last year.

II. Analysis of Influencing Factors

Products: In August, the domestic butadiene market shocks upward, strong growth in the second half of the month. By the end of the month, Sinopec’s East China supply price was 10,600 yuan/ton, up 1,300 yuan/ton annually; Liaotong’s chemical bidding base price was 10,210 yuan/ton, up 1,400 yuan/ton annually. After reaching its peak in early August, the downstream synthetic rubber rose weakly, the production profit hanging upside down increased, some private enterprises decreased or stopped, the demand side dragged on the butadiene market as a whole, and the price of butadiene rose and fell in mid-August. However, domestic spot supply continued to be tight, Malaysia’s high-price trading news in mid-month boosted the external market substantially higher, Sinopec’s supply price increased and East China’s spot resources were scarce, the prices of northern export manufacturers increased, and some high-price sources flowed into the East China market, boosting the overall market. Although the downstream rubber market is limited, butadiene supply is strong, the market is difficult to find low-price supply, and the middleman offer is firm.

Enterprises: Sinopec East China and South China Butadiene Ring Ratio increased by 1300 yuan/ton to 10600/10700 yuan/ton; as of 29 days, Liaotong Chemical Bidding Base Price was 10210 yuan/ton, Ring Ratio increased by 1400 yuan/ton, the total volume in a month was 1560 tons, Ring Ratio contracted by 50.41%; As of 28 days, Fushun Petrochemical Bidding Base Price was 9700 yuan/ton, trading range. In 9950-9960 yuan/ton, the total volume in the month is 1680 tons, with a ring-to-ring increment of more than 1,000 tons; on August 6, 100,000 tons/year oxidative dehydrogenation unit was put into operation in Chengzhi, Nanjing. On August 11, excellent products were produced. The total output of this month is about 4,000 tons, and the supply contract is the main one. The manufacturer plans to stop for about 7 days in early September; and on August 6, 100,000 tons/year oxidative dehydrogenation unit in Chengzhi, Nanjing. Oxygen dehydrogenation unit was restarted in the middle of the month, and the supply contract downstream was quoted at 10,000 yuan/ton. Due to the upstream equipment problem, the load of Jiutai butadiene unit in Inner Mongolia was not high, and the listed price was 10,500 yuan/ton at the end of the month, which increased by 1,500 yuan/ton annually. In the middle of the month, 2000 tons of Ratian in Malaysia were tendered for FOB of 1240 dollars/ton. Prices were traded to factories downstream of Taiwan, which pushed the outer disc up to 1300 US dollars/ton CFR in China.

Industry: According to the price monitoring of business associations, in August 2019, there were 37 commodities rising annually in the chemical sector, of which 15 commodities increased by more than 5%, accounting for 17.9% of the monitored commodities in the sector; the first three commodities were hydrogen peroxide (39.93%), acetic acid (20.90%) and butadiene (14.47%). There are 39 kinds of products with a decline of more than 5%, accounting for 15.5% of the monitored products in this sector. The products with the first three declines are yellow phosphorus (-27.58%), epichlorohydrin (-23.28%) and sulfur (-19.38%). This month’s average rise and fall was 0.03%.

3. Future Market Forecast

In the future, the positive aspects are: high external market, low domestic supplier inventory and short-term shortage of spot resources in East China. On the bearish side, the downstream synthetic rubber market is limited, the profit of synthetic rubber is under pressure, and the start of construction is declining. Shipments are expected to arrive in September. In recent years, domestic manufacturers and tank farms have low inventories, supporting supplier prices are strong, and it is difficult for the market to replenish low-price supply in the short term. With strong support from the supply side, the market is expected to perform at a high level in mid-early September. However, with the rising price of butadiene, downstream industry profits will be under pressure, or drag down the start of construction; in addition, some latex enterprises do not rule out the impact of the policy to start poor construction, just need also weakened expectations, September demand is weak. At the same time, I heard that more than 10,000 tons of Iranian goods are expected to arrive at the port, and the supply has also increased. In anticipation of weakening supply and demand, the market is not expected to exclude downside risks in late September. In addition, the high-priced transaction before the external market is slightly accidental, and whether the late market can continue to be strong remains to be discussed. Business analysts predict that domestic butadiene market consolidation will dominate in September. Businessmen are advised to pay careful attention to the news guide.