By: Karthika.K.V -- Research Analyst, Petrochemicals and fibers
01 January, 2017
Butadiene became a buyer’s market due to the oversupply scenario since2013.However, as Europe and Asia continueto move towards lighter feedstock from traditional naphtha cracking, butadiene supply is expected to gradually decrease in the coming years.Investments are made in logistical capacity and cracker furnace modifications required to support a switch to NGL cracking in Europe, Asia and South America. Even if lower crude oil price support heavier feedstock for crackers, butadiene producers may control the supply as the downstream demandfrom ABShas observed to have improved.The dependency on demand from SBR is expected to gradually reduce or consumption from ABS would support butadiene demand in future.When oversupplied scenario changes with enough support from downstream, butadiene market is expected to transform from buyer’s market to seller’s market.
Butadieneis an industrial chemical used in the manufacture of synthetic rubber. Itis produced as a byproduct in the steam cracking process used to produce ethylene and other olefins, except for dehydro (“on purpose”) BD(5-6percentof total worldcapacity). It is used in the production of derivatives such as ABS, NBRand SBR. These derivatives are widely used in automotive industry for the manufacture of tires and other components.
The structural shift away from naphtha(heavier feedstock) cracking to ethane(lighter feedstock) cracking is expected to reduce butadiene supply-demand with butadiene yield decreasing and demand increasing steadily.
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