Expert analysis has highlighted that although China's butadiene supply remains limited, the market has gradually moved toward a more balanced state between supply and demand.
In recent months, the global butadiene market has experienced an upward trend. By the end of February, prices in China, South Korea, and Southeast Asia rose by 30 to 40 USD/ton compared to the previous week. Some buyers were even willing to pay over 1,200 USD/ton, up from around 900 USD/ton at the end of last year. This price increase is driven by several factors. First, five major butadiene plants in South Korea and Japan are scheduled for maintenance from April to May, leading to tighter supply. Second, strong demand from downstream users in China, particularly in the synthetic rubber sector, has pushed prices higher.
Butadiene is primarily derived from the C4 fraction of ethylene production through steam cracking. It is mainly used in the production of synthetic rubbers and resins. Key products like butadiene rubber, styrene-butadiene rubber (SBR), and SBS elastomers rely heavily on butadiene as a raw material. In China, 84% of butadiene consumption goes into synthetic rubber production. As the automotive industry continues to grow rapidly, with total output reaching 5.708 million units in 2023—a 12.6% increase from the previous year—demand for synthetic rubber remains high. Additionally, industries such as hose and tape manufacturing also require large quantities of synthetic rubber. With China's strong economic growth and increased infrastructure investment, projects like the Three Gorges Dam, South-North Water Diversion Project, Qinghai-Tibet Railway, and the Beijing Olympics have further boosted the demand for synthetic rubber.
Historically, China's butadiene consumption grew significantly, from 410,000 tons in 1995 to 1.06 million tons in 2004. It is expected to reach 1.17 million tons this year and 1.44 million tons by 2010. However, domestic production has not kept pace with demand, resulting in large imports. By the end of 2004, China had 19 butadiene facilities with an annual capacity of 1.02 million tons, producing 870,000 tons domestically and importing 190,000 tons—an increase of about 44% from the previous year, accounting for 18% of total consumption.
This year, the butadiene market is set for a significant shift. Internationally, many regions face overcapacity, leading to a downturn in the butadiene industry. China, with its growing market potential, is becoming an attractive target for foreign players, which could impact domestic supply and demand. Moreover, with technological upgrades in existing ethylene plants and the completion of several large Sino-foreign joint ventures, China’s butadiene production capacity is expected to grow rapidly. Projects like Nanjing Yangba, Shanghai SECCO, and Guangdong Zhonghai Shell have already added significant capacities, and new projects are under construction. By the end of this year, China’s butadiene production capacity is projected to reach 1.37 million tons, potentially meeting domestic demand. By 2010, it may reach 1.51 million tons, possibly leading to oversupply.
Despite these challenges, the domestic butadiene industry is looking ahead. Rather than focusing solely on quantity, companies must now prioritize quality improvement. Efforts should include reducing energy and material consumption through facility upgrades, developing new technologies, exploring alternative raw materials, and increasing automation. These steps will help elevate China’s butadiene production technology to a new level, ensuring competitiveness in an increasingly challenging market.
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Xuzhou Hengshang Mechanical and Electrical Co., Ltd. , https://www.hengsenergy.com