Tan Jie, Research Institute of Sinopec Maoming Company

China is the world’s largest butadiene (BD) producer, with 4 992 kt/a capacities in 2020, accounting for 30.1% of the global total. 

BD plants are mainly concentrated in Sinopec Group (Sinopec), China National Petroleum Corporation (CNPC), Shell Chemicals, TPC Group, LyondellBasell and BASF. Sinopec Group is the largest BD producer in the world, boasting 1 600 kt/a BD capacities in 2020, which accounted for 9.7% of the global total, followed by CNPC with 1 100 kt/a capacities and taking a share of 6.6%. Shell Chemicals ranked the third, with 890 kt/a BD capacities and occupied 5.4% of the world total. Figure 1 shows capacity distribution of major world BD producers in 2020. 

Figure 1 Capacity Distribution of Major World BD Producers in 2020

China BD Supply-Demand Situation 

1. Production

China started industrial production of BD in the 1970s. PetroChina Lanzhou built up the first domestic BD plant in 1971 using the ACN technology independently developed and designed by itself. Later, Jilin Petrochemical and Beijing Yanshan Petrochemical established BD plants. Domestic BD capacity has been rising in recent years, as the start-up of new and expansion ethylene units provide a large volume of C4 feedstock for the BD industry and demand from the downstream synthetic rubber and resins industry is increasing rapidly. Qixiang Tengda’s butene oxidative dehydrogenation unit was built in 2012, which broke the process development pattern that used to be dominated by C4 extraction. 

By the end of June 2021, China became the largest BD producing country in the world with 4 992 kt/a capacities, concentrated in east and northeast China. East China (Jiangsu, Shanghai, Shandong and Zhejiang) is the largest domestic BD producing region, having 1 909 kt/a BD capacities and accounting for 38.2% of the domestic total. Distribution of major domestic BD producers and BD units in 2021 are shown in Table 1 and Figure 2, respectively. 

Figure 2 Distribution of China’s Major BD Plants in 2021

2. Import and Export Analysis

China’s BD import volume changed a lot in recent years, based on Customs statistics. The import volume stood at 202.7 kt in 2014, rose to 360.7 kt in 2017 and then decreased before a surge in 2020 to 455.2 kt. China imported 154 kt of BD in January-July 2021, down by 52.0% year on year. China also exports BD, with the volume at 11.7 kt in 2014 and up to 21.5 kt in 2020. China’s BD imports surged to 99.6 kt in January-July 2021. 

China’s major BD import origins include Netherlands, Iran and South Korea. They together supplied 241.7 kt of BD to China in 2020, occupying 53.1% of the total imports and up by 56.6% from 154.3 kt in 2019. Netherlands was the largest BD import supplier of China, exporting 113.1 kt and accounting for 24.8% of the total. The volume spiked by around 160.0% year on year. Iran won the second place, offering 71.2 kt of BD to China, with a share of 15.6% and the volume climbed by around 41.3% year on year. South Korea ranked the third, with 57.4 kt of BD flowing into China, covering 12.6% of the total and the volume fell by around 5.0% year on year.  

China’s BD imports are mainly based on general trade and processing trade with imported materials. The two trade modes together contributed to 450.6 kt of BD imports in 2020, accounting for 99.0% of the total and up by around 63.0% from 276.5 kt in 2019. Of these, 415.4 kt were via general trade, occupying 91.3% of the total and up by 83.9% year on year, while 35.2 kt was through processing trade with imported materials, taking up 7.7% of the total and down by around 30.4% year on year. 

3. Supply-Demand Situation

China’s apparent BD consumption rose steadily in 2014-2020, climbing from 2 583 kt in 2014 to 3 753.8 kt in 2020 and the self-sufficiency rate was down from 92.6% to 88.4%. Figure 3 shows China’s BD supply-demand situation in 2014-2020.

Figure 3 China's BD Supply-Demand Situation in 2014-2020

In China, BD is mainly used to produce butadiene rubber (BR), styrene butadiene rubber (SBR), ABS resin and styrene butadiene thermoplastic elastomer etc. In recent years, a number of new and expansion styrene butadiene thermoplastic elastomer units were built amid rapid industry development, which greatly boosted BD demand. In 2020, BR accounted for 31% of domestic BD consumption, styrene butadiene thermoplastic elastomer occupied 21%, SBR 20%, ABS resin 16%, acrylonitrile-butadiene rubber (NBR) 4% and others 8%. 

Development Trends and Suggestions

1. A number of new and expansion BD projects will be built in China during 2021-2025, mainly based on C4 extraction process, including Gulei Petrochemical’s 130 kt/a, Sinopec-SK (Wuhan) Ethylene’s 60 kt/a, Hainan Refining & Chemical’s 160 kt/a, Shenghong Refining & Chemical’s 150 kt/a, Liaoning Huajin’s 130 kt/a, Zhenhai Refining & Chemical Company (ZRCC)’s phase II 160 kt/a, Zhejiang Petroleum & Chemical (ZPC)’s phase II 200 kt/a, Shenhua Ningxia Coal’s 64 kt/a, CNOOC and Shell Petrochemicals Company (CSPC)’s phase III 200 kt/a, Luqing Petrochemical’s 140 kt/a, Dongming Petrochemical Shandong Jinhai Chemical’s 50 kt/a, Lianyungang Satellite Chemical’s 60 kt/a, Shenhua Yulin’s 200 kt/a and Guangdong Petrochemical’s 110 kt/a units, concentrated in east, south and northeast China. If these units start up as scheduled, China’s BD capacity will reach 7 000 kt/a by 2025, while demand will be only around 4 500 kt/a, leading to an acute surplus capacity and fierce competitions. 

2. Currently in China, BD units using oxidative dehydrogenation of butene are operating at relatively low rates due to high costs. In addition, bearish product prices and the delay or cancellation of downstream units construction affect normal plants operation. Hence, C4 extraction process will remain China’s major production method of BD.  

3. China will see a growing oversupply of BD with capacities expanding but being lack of new downstream plants. This will have a heavy influence on China’s BD supply pattern and import and export situations. BD import volume will gradually decrease in the coming years, while export volume will increase and China will shift from a net BD importer to a net exporter. As most new BD plants are not equipped with downstream units, more volumes will flow into the market, intensifying competitions, which may keep BD prices at low levels.   

4. BD consumption structure is expected to change sharply in 2025, based on the start-up tempo of BD and downstream projects. Although BD will still be mainly used in SBR and BR production, the share will fall due to the lack of new or expansion units. While the styrene butadiene thermoplastic elastomer and ABS resin take a larger share with new plants coming on stream successively. Demand from the adiponitrile industry has a big growth potential. Adiponitrile is mainly used to produce PA66, but the domestic production is still blank at present. The new units’ start-up will increase BD application in the chemical sector. In 2025, demand from the BR industry is expected to account for 27% of total domestic BD consumption, that from the SBR 19%, ABS resin 15%, SBC 22%, acrylonitrile-butadiene rubber (NBR) 5%, adiponitrile 6% and others 6%. 

Market competition is intensifying as growing domestic capacity has been raising China’s BD self-sufficiency rate. As for existing enterprises, they shall continue improving production technology, lower production costs, reduce environmental impacts, enlarge and strengthen BD and its downstream industry chain to further boost their economic benefits. To new or expanded enterprises, they shall carry out sufficient market researches and demonstrations, establish supporting downstream units, with market volume and growth prospects according to upstream and downstream situations. In addition, they shall constantly improve products quality, actively explore the international market, to alleviate domestic supply-demand contradiction so as to ensure a stable and heathy development of China's butadiene and its downstream industries.