China to Lead Asia-Pacific to the Forefront of the Global Butadiene Industry

Wednesday 8 October 2014, Amsterdam

China is driving the global butadiene industry with demand from its synthetic rubber and plastics sectors, accounting for 23% of the global butadiene market in 2013 and likely to increase to 25.4% by 2018. Although it has shown some signs of slowing down in the last two years, China’s forecast demand growth is expected to remain the highest of all of the major butadiene markets, including the US, South Korea and Japan, over the 2014–2018 forecast period.

 The US and South Korea are the other two largest butadiene markets; however, they are saturated and are not expected to witness strong growth over the forecast period. India, one of the fastest-growing countries in terms of demand, will grow at a higher-than-average growth rate of 15.6% to be the ninth largest market by 2018. The following figure shows the shares of the major countries in the global butadiene market in 2013 and 2018.



China and Russia to Add the Most Capacity in the Next Five Years

China and Russia will be the largest contributors to butadiene capacity in the forecast period, accounting for 34.6% of global capacity additions. In China, capacity expansion is driven by growing demand from synthetic rubber plants, which use butadiene as a feedstock. The country is likely to add around 0.68 million tons per year (mmty) of new capacity by 2018. In Russia, capacity expansion is driven by the government’s aim of diversifying the economy, and encouraging the growth of the downstream petrochemicals sector will create more investment for the olefins industry, boosting the wider economy. There are currently two Russian butadiene plants planned, by Vostochnaya Neftechimicheskaya and ZapSibNeftekhim.

The US will be the third largest capacity contributor to capacity additions, with an on-purpose plant in Houston. The country will add 0.27 mmty of capacity to cater mainly to the domestic market, which is facing a shortage of butadiene due to the increased use of ethane feedstock in crackers. This is the only new butadiene plant planned in the US, over the 2014–2018 period..

Prices Expected to Increase at a Steady Rate

 Globally, butadiene prices are expected to grow at a steady rate over the next five years. However, in the Middle East and Africa, availability of abundant feedstock, moderate demand and sufficient supply will keep prices at a lower level than in other regions. The difference in price between the Middle East and Africa and other regions is expected to be at least US$300/metric ton over the next five years. Prices are likely to remain the highest in Asia-Pacific due to firm demand. In North America, prices are also expected to remain high due to a decline in local production and steady demand. In South America, sufficient supply and moderate demand will keep prices at a lower level than in Asia-Pacific and North America, while European prices are also expected to remain low due to weak demand.