Lead: Entering June, the domestic butadiene market saw a slight uptick in prices followed by a significant decline. As of June 5, the mainstream supplier prices and market prices had fallen by approximately 3%-5% compared to the end of May.

1) Coordinated decline in upstream and downstream products, limited positive market signals

Table 1: Price overview of butadiene and related products

| Product | Region/Category | Current Period Average | Previous Period Average | Change | Change (%) | Unit |
| --- | --- | --- | --- | --- | --- | --- |
| Crude Oil | Brent | 94.91 | 99.23 | -4.32 | -4.35% | USD/barrel |
| Naphtha | Japan | 784.85 | 865.88 | -81.03 | -9.36% | USD/ton |
| Butadiene | Sinopec Listing Price | 12020 | 12140 | -120 | -0.99% | RMB/ton |
| | CFR China | 1565 | 1618 | -53 | -3.25% | USD/ton |
| | FOB Korea | 1585 | 1628 | -43 | -2.61% | USD/ton |
| | Shandong | 11820 | 11880 | -60 | -0.51% | RMB/ton |
| | Jiangsu | 11945 | 12050 | -105 | -0.87% | RMB/ton |
| | Jiangyin | 11780 | 11893 | -113 | -0.95% | RMB/ton |
| | Zhejiang | 11975 | 12080 | -105 | -0.87% | RMB/ton |
| BR (Butadiene Rubber) | Shandong | 14500 | 14550 | -50 | -0.34% | RMB/ton |
| SBR (Styrene Butadiene Rubber) | Shandong | 15070 | 15420 | -350 | -2.27% | RMB/ton |
| SBS | Shandong | 13800 | 14000 | -200 | -1.43% | RMB/ton |
| ABS | Yuyao | 9450 | 10200 | -750 | -7.35% | RMB/ton |
| NBR (Nitrile Butadiene Rubber) | Hengshui | 16600 | 17160 | -560 | -3.26% | RMB/ton |

Source: chempricehub Information

Looking at the trends of butadiene's upstream and downstream products, prices of butadiene's upstream products (crude oil and naphtha) and most downstream products have shown a clear decline recently. For reference, the price of upstream Japanese naphtha fell by 9.36% during the week, while downstream product prices fell by a range of 0.34% to 7.35%. The significant decline in upstream and downstream prices indicates, on one hand, the lack of obvious supporting factors for butadiene's cost side, and on the other hand, it reflects the increasing production and sales pressure on downstream products, partly corroborating the current market situation of sluggish procurement by end-users. Simultaneously, the decline in the butadiene external market prices is also quite evident, and this drop reflects the increasingly thin negotiation atmosphere in the export direction, indicating a decrease in demand for exports as well.

2) Profit concentration in the upstream chain; downstream demand drag expected to persist

Recently, in the tug-of-war between domestic butadiene supply and demand, the impact of low downstream purchasing sentiment has gradually outweighed the influence of increased butadiene maintenance expectations in China. From a data perspective, butadiene's theoretical production profit has bucked the trend and risen during this period, but most downstream production profits continue to face pressure. Currently, among the main downstream products, aside from SBR production which is profitable, the production profits for BR, SBS, and ABS are all experiencing significant losses. Notably, the production loss for ABS has expanded to 1610 RMB/ton.

The direct feedback of poor production profits is a slight decline in downstream capacity utilization rates. Looking at the main downstream products, the capacity utilization rates for BR, SBR, and SBS have decreased by 0.54 to 1.13 percentage points compared to the previous period. This decline not only reduces the direct consumption demand for butadiene but also confirms the weak willingness of downstream end-users to purchase raw materials.

Currently, most downstream products are facing poor production profits and slow finished product sales to varying degrees. The negative feedback from end-use demand is unlikely to dissipate quickly and will gradually transmit upstream. It is expected that the overall profit decline scenario in the butadiene industrial chain will persist in the next cycle, and product market prices will remain under pressure.