Butadiene Availability: Forecast of the Supply / Demand Balance and Impact On Synthetic Rubber

Three of the most widely used rubbers, styrene butadiene rubber, polybutadiene rubber, and nitrile rubber, rely on the reasonable availability of butadiene feedstock that is sourced as a byproduct of ethylene production.   After many years of chronic oversupply of mixed C₄ and butadiene, the recent shift to lighter feedstocks for ethylene steam crackers has led to occasional butadiene shortages.  As a result, since 2008 there have been three severe supply shocks, where butadiene supply was extremely tight and prices briefly rose to unprecedented levels.  Since over 95% of butadiene supply is extracted from mixed C₄ byproduct from steam crackers, there is very little “on-purpose butadiene” available to relieve this shortage.  Consequently, during the supply shocks, available “spot market” butadiene supply was directed to the highest bidder – leading to substitution and demand destruction along the competitive frontier of certain butadiene derivatives.

Nexant has carefully analyzed the potential supply of mixed C₄ from existing and projected steam crackers, most of which will be built in the Middle East and Asia.  As a result of the aforementioned changes in ethylene feedstocks, the incremental supply of contained butadiene in mixed C₄ is projected to fall well short of demand for butadiene, leading to future, and even more severe, butadiene supply shocks. 

This paper will show how the structural shortage of butadiene may develop over the next decade and predicts several new sources of butadiene supply, including “on-purpose” butadiene, which will inevitably bring the supply and demand for butadiene back into balance.