The exhibit below looks at the difference between a strong butadiene market in the US and a much weaker one in Asia. The strength in the US is a function of the stronger US economy and consumer spending as well as logistic issues with products containing butadiene derivatives, but also because there is no incentive to increase heavier cracker feedstock use right now in the US and consequently co-product butadiene supply remains constrained.
Asia is also seeing strong demand but is overwhelmed by the new capacity in China, associated with all of the new heavy feed ethylene units. It is also possible that some of the shipping challenges in China right now are impacting demand. Tire demand should be improving generally as vehicle miles traveled increase, and we can personally vouch for busy tire repair/replacement shops in Houston this week and certainly much busier than they would have been a year ago. The price arbitrage with Asia has narrowed and is probably not high enough to encourage much more trade to the US. See our daily report for more.
Source: Bloomberg, C-MACC Analysis, June 2021
