Butadiene Capacity Expands Rapidly

By Yang Xiuxia

Butadiene is an important basic organic raw material in the
petrochemical industry. Its position in olefin raw materials is
only next to ethylene and propylene. Butadiene has extensive
applications in synthetic rubbers and organic synthesis sectors.
It can be used to synthesize ABS
(acrylonitrile-butadiene-styrene) resin and various rubber
products such as BR (polybutadiene rubber) and SBR
(styrene-butadiene rubber). It can also be used to produce
organic chemical products such as hexane dinitrile and hexane
diamine.

Stable demand growth in the world

The capacity of butadiene in the world was 11.403 million t/a
in 2005, the consumption was 9.428 million tons and the operating
rate was 83%, a drop of 3.0 percentage points from 2004. Asia,
North America and Western Europe are the major butadiene supply
and consumption regions. The total consumption of butadiene in
these 3 regions was 8.152 million tons in 2005, accounting for
84.5% of the world total. The capacity in Asia was 4.008 million
t/a, accounting for 35.1%, the capacity in North America was
3.099 million t/a and the capacity in Western Europe was 2.533
million t/a.
     It is expected that the butadiene market in the world will
still grow stably from 2006 to 2010 and the demand growth will
be equal to the capacity growth. The capacity and the demand will
reach 13.263 million tons and 10.936 million tons respectively
in 2010. Asia will be the region with the rapid increase in both
the capacity and the consumption and the average annual growth
will be 6.9% and 4.1% respectively.

Rapid output increase in China

With the rapid development of the ethylene industry in China,
cracked C4 resources for the butadiene production increase and
the butadiene extraction capacity has expanded constantly. The
total capacity of butadiene in China was 1.276 million t/a in
2005. The capacity in the butadiene unit of CNPC Jilin
Petrochemical Company Ltd. was the largest, being 230 thousand
t/a and accounting for 18.0% of the national total. The capacity
in Sinopec Qilu Petrochemical Company Ltd. came next and reached
164 thousand t/a. The output of butadiene in China increased from
591 thousand tons in 2000 to 1.04 million tons in 2005 with an
average annual growth of 12%. Stimulated by the demand in
downstream synthetic rubber and ABS sectors during the Tenth
Five-year Plan period (2001-2005), the consumption of butadiene
grew rapidly and the apparent consumption reached 1.172 million
tons in 2005 with an average annual growth of 11.9% from 2000
to 2005.
   A 30 thousand t/a butadiene unit in Bluestar Tianjin
Petrochemical Company Ltd. started production (CCR2006, No. 18)
and a 165 thousand t/a butadiene unit in CNOOC Shell
Petrochemical Co., Ltd. in Huizhou of Guangdong province was
also completed and put on stream in the first half of 2006.
Besides, a 100 thousand t/ butadiene unit in Sinopec Maoming
Petrochemical Company Ltd. also recently started production.
(CCR2006, No. 24) The capacity of butadiene in China has already
reached 1.571 million t/a today. Owing to the demand increase
in the rubber product market and the supply deficit of natural
rubber due to abnormal climate, the demand of synthetic rubbers
is going up, resulting in a brisk demand of butadiene. It is
expected that due to impacts from the supply increase of natural
rubber and the overall high rubber price on the downstream demand,
the tension in the butadiene supply will be eased in the second
half of 2006.
   Most butadiene producers in China have nearby matched
downstream units. Sinopec Maoming Petrochemical Company Ltd.,
CNPC Daqing Petrochemical Company Ltd. and Panjin Ethylene Co.,
Ltd. have some butadiene to be supplied as commodity to the
domestic market. Butadiene producers such as Sinopec Yangzi
Petrochemical Company Ltd., Sinopec Shanghai Petrochemical
Company Ltd., Sinopec Guangzhou Petrochemical Company Ltd.,
Beijing Dongfang Chemical Plant, CNPC Fushun Petrochemical
Company Ltd. and Shanghai Secco Petrochemical Company Ltd.
(joint venture) have no matched downstream units. Butadiene they
produce is totally supplied as commodity to the domestic market.
   With the constant economic development in China and in the
world, the import amount of butadiene in China has increased
constantly. The average annual growth of the import amount was
11.4% during the Tenth Five-year Plan period (2001-2005). With
the completion of the 90 thousand t/a butadiene unit in Shanghai
Secco Petrochemical Company Ltd. and the upgrading of the
operating rate in some butadiene units due to the ethylene output
increase, the output of butadiene in 2005 was 15.3% higher than
that in 2004. The price of butadiene in the international market
in the first half of 2005 was also higher than that in the
domestic market. The import amount has therefore reduced
drastically. The import amount was 147.2 thousand tons in 2005,
a drop of 24.9% from 2004.
   Import sources for butadiene in China have increased
constantly in recent years. The import was mainly made from
peripheral countries and regions such as Korea, Japan and Taiwan
province before 2003. In the past two years, however, the amount
imported from India, the United States, Brazil and the
Netherlands has increased constantly. The import of butadiene
in China was mainly made in general trade. The amount imported
in general trade was 125 thousand tons in 2005, accounting for
84.9% of the total import amount.
   BR is the largest consumer of butadiene in China. The output
of BR was 399 thousand tons in 2005 and 405 thousand tons of
butadiene was consumed, accounting for 34.5% of the total.

Future supply/demand balance in China

Several butadiene projects are being constructed or planned for
construction in China. If all these projects can be completed
on schedule, the capacity of butadiene will be expanded by 890
thousand t/a in 2010. After the capacity in existing units is
added, the total capacity of butadiene will reach 2.46 million
t/a at that time. Besides, Sinopec Yangzi Petrochemical Company
Ltd. plans to construct a 140 thousand t/a butadiene unit to
match the 600 thousand t/a ethylene unit in BASF-YPC Co., Ltd.
The unit will be completed in the next 2-3 years. Capacity
expansion of butadiene will also likely be conducted in the
ethylene capacity expansion project in Guangzhou Petrochemical
Company Ltd. It is therefore possible for the total capacity of
butadiene units in China to reach more than 2.7 million t/a in
2010.
   The demand of synthetic rubbers and ABS resin will continue
to increase drastically in the next 5-10 years. ABS resin, SBR,
SBR latex and SBS (styrene-butadiene-styrene block copolymer)
will become the main driving force for the demand growth of
butadiene. It is expected that the demand of butadiene in China
will reach around 2.4 million tons in 2010. The supply and the
demand of the butadiene market in China will tend to be balanced.

Table 1  Supply and Demand of Butadiene
     in China from 2000 to 2005   (thousand tons)
Year   Output  Import Export  Apparent consumption
2000      591    85.8     6.0      670.8
2001 &nb