The recent collapse in Asia butadiene prices, as implied in the charts below is likely mostly supply-driven, given all the new heavy feed ethylene capacity that has been added in China and its impact on associated butadiene supply. On the demand side, there are negative impacts both from the overall slower growth in China and from the forced cutbacks in auto production because of the semiconductor shortages – ultimately this feeds back into tire demand. Further, with the Delta variant slowing consumer activity in Asia this has likely resulted in below trend tire replacement. See more in our daily report.
Source: Bloomberg, C-MACC Analysis, September 2021