By Tan Jie, Sinopec Maoming Petrochemical Company Research Institute

Production

PetroChina Lanzhou Petrochemical Company constructed China’s first butadiene unit in 1971, employing domestic ACN technology. Since then, China’s butadiene capacity has increased stably, and soared 1.85 million t/a during 2017-2021 to 5.51 million t/a at the end of December 2021 (see Figure 1 and Table 1 for more details). Capacity expansion brought many changes, like supply moving toward loose, gradually falling import volume, growing export volume, etc.

Figure 1 Changes of China’s butadiene capacity during 2017-2021

Domestic butadiene production currently has four main features: 1) more diversified suppliers mainly attributable to new butadiene units put into production by many private firms or joint ventures (e.g. Jiangsu Sierbang Petrochemical Co., Ltd., Zhejiang Petroleum & Chemical Co., Ltd., etc.); 2) dominated carbon four extraction process, butadiene units adopting which boasted a combined capacity of 4.93 million t/a in 2021, accounting for 89.48% of domestic total capacity; 3) being usually equipped with ethylene-refining integration units or sometimes downstream production units (e.g. downstream ABS resin and SBS production units in Fujian Gulei Petrochemical Co., Ltd., downstream ABS resin and SBR units in PetroChina Jilin Petrochemical Company, etc.); 4) relatively concentrated capacity, with 4.32 million t/a, 78.28% of the total, coming from east China, south China and northeast China in 2021 (see Figure 2 for details).

Figure 2 China’s main butadiene production areas in 2021

Butadiene capacity of private enterprises has increased rapidly in recent years, but Sinopec and CNPC are still two major suppliers – boasting capacities of 2.03 million t/a (36.87% of domestic total capacity) and 1.1 million t/a (19.97%), respectively, in 2021 – followed by China Ocean Group with a capacity of 345 000 t/a (6.26%) and ChemChina owning a capacity of 120 000 t/a (2.18%). Other producers accounted for 34.72% in 2021, equivalent to 1.91 million t/a.

Import and export

From 2017 to 2021, China’s import volume of butadiene showed a downward trend, although the volume surged 56.78% YoY to the recent years’ highest of 455 300 tons in 2020. However, import volume dropped 45.53% YoY to 248 000 tons in 2021, due to factors such as domestic high capacity increment, demand remaining stable, foreign goods with no price advantage, etc. In the first half of 2022, the volume plummeted further 53.97% YoY to 67 200 tons. During 2017-2021, import prices of butadiene fell first, and then increased, and reached US$1 072.21/t in the first half of 2022, up 8.66% YoY.

Export volume skyrocketed from 4 000 tons in 2017 to 154 300 tons in 2021, a record jump of 617.67% YoY mainly because of China’s rising supply, short supply in the US, widening price gap between European-American and Asian markets, etc. In the first half of 2022, export volume declined 39.42% YoY to 41 500 tons.

Supply, demand and future development

China’s apparent consumption of butadiene has grown stably during 2017-2021, rising 2.39% YoY to 3.84 million tons in 2021, when product self-sufficiency rate went up to 97.56% from 88.06% in 2017. Figure 3 shows domestic butadiene supply and demand from 2017 to 2021.

Figure 3 Butadiene supply and demand from 2017 to 2021 in China

In 2021, cis-polybutadiene consumed 30.5% of butadiene, butadiene styrene rubber 21%, ABS resin 16.5%, butadiene thermoplastic elastomer 16%, styrene-butadiene latex and NBR latex 10%, nitrile rubber 4%, and other fields 2%.

In the downstream areas of butadiene, many new or expansion projects will be put into production in the next few years, mainly including cis-polybutadiene projects (e.g. 40 000 t/a project of Zibo Qixiang Tengda Chemical Co., Ltd., 100 000 t/a project of Sinopec Maoming Petrochemical Company), butadiene styrene rubber and butadiene thermoplastic elastomer projects (e.g. 120 000/80 000 t/a SSBR/SBS project of PetroChina Guangxi Petrochemical Company, 170 000 t/a project of Hainan Baling New Chemical Materials Co., Ltd., etc.), ABS resin projects (e.g. 300 000 t/a project of Hengli Petrochemical (Dalian) New Material Technology Co., Ltd., 600 000 t/a Yulongdao refining and chemical integration project phase I, etc.), and NBR latex projects (e.g. 150 000 t/a project of Ningbo Lejin Yongxing Chemical Co., Ltd., 100 000 t/a project of Xinxiang Grand Tree Industry Co., Ltd., etc.). If those new or expansion projects start production as scheduled, domestic butadiene consumption structure will change greatly. More specifically, cis-polybutadiene will remain the largest consumer, but butadiene thermoplastic elastomer will replace butadiene styrene rubber to become the second largest one. A potential consumer will be adiponitrile.

Domestic demand for butadiene is forecast to reach 5 million tons in 2026, when China’s butadiene capacity may grow to around 8 million t/a, given that many enterprises are planning to kick off new butadiene projects in the coming years – e.g. Sinopec Zhenhai Refining & Chemical Company intending to construct 160 000 t/a project, PetroChina Guangdong Petrochemical Company planning to construct 110 000 t/a project, etc.

Development trends and suggestions

Domestic butadiene supply may become excessive, mainly owing to future new capacities mainly from state-owned enterprises (Sinopec and CNPC for example) in east China, south China and northeast China, which will still be three major production areas, with East China being the largest one continually. Carbon four extraction process will remain the dominated butadiene production technology. Profits of butadiene producers can hardly grow as increasing supply may drag down butadiene prices, but downstream companies may make relatively high profits. In addition, import volume of butadiene will gradually decrease, while export volume will increase. Hence, current net import may be replaced by net export.

Facing severer competition, butadiene producers should optimize production technologies, lower production costs, reduce environmental pollution and improve profits. Producers should expand butadiene capacity reasonably, and they are wise to conduct market research and construct supporting facilities to produce proper downstream products. Further, they should increase input in R&D, improve product quality and stimulate export. Expanding international markets, stabilizing domestic prices and enriching product applications are all recommended.