In late May 2026, as a new phase of the Middle East military conflict de-escalated and supply-demand tensions in the East Asian region eased significantly, both domestic and international butadiene markets experienced substantial declines compared to earlier periods. Looking ahead, a limited tug-of-war between domestic supply reductions and modest demand growth is expected to persist. Combined with uncertainties from macroeconomic news, butadiene market prices are likely to exhibit wide fluctuations.

1. Weakening upstream feedstock prices and persistent downstream offtake pressure drive significant declines across the butadiene chain this week

In the final week of May, the butadiene market showed a clear downward trend. As of May 27, Sinopec East China's butadiene price stood at 12,000 yuan/ton, down 500 yuan/ton cumulatively from the previous Friday, while the Shandong Luzhong delivered price was 11,600 yuan/ton, down 650 yuan/ton from the previous Friday.

Table 1: Current butadiene and related product price list

| Product | Region/Category | Current Period Average | Previous Period Average | Change | Change % | Unit |
| --- | --- | --- | --- | --- | --- | --- |
| Crude Oil | Brent | 99.23 | 108.68 | -9.45 | -8.70% | USD/bbl |
| Naphtha | Japan | 865.88 | 999.80 | -133.92 | -13.39% | USD/ton |
| Butadiene | Sinopec List Price | 12,140 | 12,820 | -680 | -5.30% | yuan/ton |
| | CFR China | 1,618 | 1,674 | -56 | -3.38% | USD/ton |
| | FOB Korea | 1,628 | 1,674 | -46 | -2.78% | USD/ton |
| | Shandong | 11,880 | 12,795 | -915 | -7.15% | yuan/ton |
| | Jiangsu | 12,050 | 12,795 | -745 | -5.82% | yuan/ton |
| | Jiangyin | 11,893 | 12,630 | -737 | -5.84% | yuan/ton |
| | Zhejiang | 12,080 | 12,825 | -745 | -5.81% | yuan/ton |
| Butadiene Rubber (BR) | Shandong | 14,550 | 15,560 | -1,010 | -6.49% | yuan/ton |
| SBR 1502 | Shandong | 15,420 | 16,260 | -840 | -5.17% | yuan/ton |
| SBS | Shandong | 14,000 | 14,200 | -200 | -1.41% | yuan/ton |
| ABS | Yuyao | 10,200 | 10,670 | -470 | -4.40% | yuan/ton |
| NBR | Hengshui | 17,160 | 17,900 | -740 | -4.13% | yuan/ton |

During the week, butadiene prices showed a continuous decline. On one hand, the apparent positive expectations for Middle East peace talks weighed on crude oil markets, while the persistent sharp drop in Japanese naphtha prices further aggravated the bearish cost side for butadiene. On the other hand, downstream butadiene products faced unabated offtake pressure and further declines in production margins, leading to increased wait-and-see sentiment among end-users. However, from the domestic supply perspective, as planned maintenance shutdowns at a plant in Northwest China and some facilities in East and South China are scheduled to gradually begin in June, concerns over shrinking available spot resources persist, which somewhat limits the downside for butadiene prices.

2. Downstream product margins under pressure affect demand follow-through

Looking at the trend charts, butadiene production margins have generally been declining recently. However, this week, butadiene margins improved slightly month-on-month, mainly because the decline in mainstream butadiene supplier prices was significantly smaller than the drop in naphtha prices, influenced by growing concerns over increasing butadiene plant maintenance. For downstream products, synthetic rubber production margins declined notably, with the loss from butadiene rubber (BR) production widening further. Although the theoretical production margins for SBS and ABS improved marginally, they remained in negative territory. Regarding butadiene and downstream capacity utilization rates, except for ABS which remained stable, BR, SBR, and SBS all have some room for slight increases. However, given the persistent offtake pressure and poor production profitability, the potential for capacity utilization increases in the next period is expected to be significantly limited, with no major incremental demand driver for butadiene on a feedstock basis.

3. Amid limited demand growth, supply support and weak cost factors may continue to clash

In the short term, from a news perspective, although uncertainties persist in the progress of a new round of Middle East peace talks, the significantly pressured center of gravity for crude oil and naphtha prices impacts market sentiment. On the demand side, ABS, SBS, and synthetic latex industries are gradually entering the off-season, while synthetic rubber demand growth is limited. Therefore, the overall demand side lacks effective positive catalysts. On the supply side, some domestic butadiene plants are undergoing maintenance in June, affecting some external sales volumes. Additionally, import supply is expected to be limited in the first half of June. Under the expectation of reduced supply, the market still anticipates a tightening of domestic supply-demand balance. Moreover, with prices having fallen significantly, some downstream buyers are showing interest in restocking at lower levels. In summary, although the supply-demand fundamentals show some mild positives, the significant drag from cost factors and market news suggests that spot butadiene prices are likely to fluctuate widely in the near term, with the average price level expected to decline slightly.