Butadiene Availability: From Scarcity to Abundance, But for How Long?

The butadiene derivatives markets, of which synthetic rubbers comprise over 60 percent, has radically changed over the past year.  Due to the economic recession in Europe and slowdown in China, the supply/demand balance for the butadiene value chain has completely shifted during the last 12 months from extreme tightness to relative slackness.  This volatility is anything but new to the butadiene value chain; in the long-term, the forecast global supply of butadiene from mixed C4 will be unable to meet market demand for rubber (and other butadiene derivatives) as US crackers continue the trend of switching to ethane feedstocks and China continues to add coal-based light olefin capacity. 

Nexant has carefully analyzed the potential supply of butadiene from projected steam crackers and “on-purpose” sources.  In the last 12 months the butadiene supply outlook has markedly improved; China has built or planned more than 15 new butadiene plants, most of which are for “on-purpose” butadiene, and Europe and the Middle East plan to extract considerably more butadiene from their mixed C4 production.  As a result of the aforementioned changes in ethylene feedstocks, the incremental supply of “on-purpose” butadiene in Asia is projected to eventually be met by global demand for butadiene, leading to future butadiene supply shocks.  

This paper will show how the recent shortage of butadiene may be overcompensated in the short-term by the several new sources of butadiene supply, including “on-purpose” butadiene, and reveal the challenge to balance these supplies against the forecast growth of its synthetic rubber derivatives.