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The growth of China's domestic rubber and plastic industries has provided a supportive foundation for butadiene prices. In 2008, the primary market for butadiene remained concentrated in East China, with price movements in Southeast Asia significantly influencing the domestic market. The average price for the year is expected to be slightly higher than the previous year, with East China's annual average ranging between RMB 11,000 and RMB 12,000 per ton. As domestic ethylene and C4 product production capacity expands, the supply shortage of butadiene in China is expected to improve, reducing the country’s reliance on imports.
Butadiene is a key petrochemical raw material, serving as the largest monomer in the synthetic rubber industry and an essential intermediate for synthetic resins and other chemical products. In 2007, the domestic butadiene market exhibited three major trends: volatile pricing with a large fluctuation range of up to 7,680 yuan/ton; a significant increase in total resources, with an estimated annual output of around 1.35 million tons and imports of about 110,000 tons; and a declining import dependency. Additionally, prices were closely linked to Southeast Asian markets, where a sharp drop created psychological pressure on local producers and traders, leading to frequent price swings.
In recent years, rising international oil prices have supported ethylene prices, which in turn helped stabilize butadiene prices. With increased production costs, it is unlikely that butadiene prices will fall sharply in 2008. Moreover, the significant price drop in 2007 led to technical adjustments in the market. As the paper and footwear industries grow, particularly with the expansion of high-grade highways, demand for SBR and SBS is expected to rise, providing support to butadiene prices.
Looking ahead, domestic ABS resin is poised for further development, which will drive demand for butadiene. Widely used in electronics, light industrial products, automotive parts, agricultural machinery, and pipeline containers, the demand for ABS resin is set to grow alongside the development of these sectors. Meanwhile, K resin, known for its high impact strength, toughness, transparency, and good processing performance, is gaining more market attention due to its competitive advantages.
However, the butadiene market in 2008 also faced several challenges. First, the weak performance of downstream products put pressure on prices, and with limited ability to absorb high costs, there was an expectation of phased oversupply, which could limit price increases. Second, new production capacities coming online, such as Daqing Petrochemical’s 70,000-ton plant, Sichuan PetroChina’s 150,000-ton facility, and Guangzhou Petrochemical’s 120,000-ton project, would add to market pressure. Lastly, macro-control policies and environmental regulations were expected to influence the downstream sectors, affecting the overall butadiene market dynamics.