Butadiene: Tight Supply Leads to 26% Price Increase

In 2024, the butadiene market had a remarkable performance. Affected by tight supply, the price of butadiene kept rising in the first three quarters. Then, due to the commissioning of new production capacity, the market declined sharply in the fourth quarter, but still closed with a slight upward trend at the end of the year. Compared with the beginning of the year, the price of butadiene increased by nearly 26%.

The overall market of butadiene in 2024 showed a trend of rising, then falling, and rising again. The average market price of butadiene in 2024 was 11,800 yuan per ton, an increase of more than 40% compared with 8,200 yuan per ton in 2023. It was eye-catching in the chemical market.

In the first half of 2024, the domestic butadiene market rose sharply. Taking the East China market as an example, the mainstream average price was 10,861 yuan per ton, an increase of 35.92% year-on-year. Especially in June, the domestic butadiene market rose rapidly. In the second quarter, the domestic butadiene market first declined and then rose. It showed a downward trend in April, which continued until the first ten days of May. After that, the market price rose continuously until late June, reaching a nearly three-year high.

In the third quarter of 2024, the butadiene market showed a strong upward trend. Still taking the East China market as an example, the average price was 12,839 yuan per ton, an increase of 7.80% month-on-month and 74.44% year-on-year. The lowest price in the whole quarter was about 12,000 yuan.

In the fourth quarter of 2024, the price of butadiene fell below 10,000 yuan in October, dropping to around 9,600 yuan, and then rebounded slightly. By the end of the year, the price was around 11,000 yuan.

The main reason for the tight supply of butadiene is that the cracking profit of ethylene-naphtha was low in 2024, resulting in a low operating rate of the units. And the new production capacity of butadiene was put into operation later than expected. Meanwhile, overseas supply was tightened, leading to a significant decline in China's net imports of butadiene. From January to November, the export volume increased by nearly 77% year-on-year.

The main downstream products of butadiene in China are cis-butadiene rubber, styrene-butadiene rubber, acrylonitrile-butadiene-styrene copolymer (ABS) and styrene-butadiene block copolymer (SBS). In 2024, the downstream industries such as cis-butadiene rubber, styrene-butadiene rubber and ABS generally suffered losses, with low operating rates.

Overall, in 2025, the new production capacity of butadiene is expected to be greater than the growth in downstream demand. There is an expectation of a relaxed supply-demand situation in the butadiene market. However, in the process, there may still be some short-term mismatches between supply and demand that could boost the market.