Over the past three months, 1.3-butadiene market prices have surged rapidly, climbing from an initial 6,800 RMB/ton to approximately 9,500 RMB/ton by January 2026. This represents a cumulative increase of 2,700 RMB/ton, marking a nearly 40% rise.

According to SunSirs data, historical price fluctuations over the past 16 years show that 1,3-butadiene prices have previously reached two peaks: 29,000 RMB/ton in July 2011 and 24,000 RMB/ton in February 2017. From 2018 through the end of 2025, China's 1,3-butadiene market price remained persistently depressed, fluctuating within the range of 4,000-8,000 RMB/ton. It briefly surpassed 13,000 RMB/ton in mid-2024 but quickly retreated to around 7,000 RMB/ton.

Reviewing the past 16 years, 1,3-butadiene has been a chemical product characterized by intense price volatility. Although the price range has narrowed in recent years, fluctuations exceeding 3,000 RMB/ton still occur. As a gaseous chemical and byproduct of cracking units, 1,3-butadiene is significantly influenced by storage conditions and broader chemical market dynamics. The demanding storage requirements and cycles during summer heatwaves contribute to its market weakness. Furthermore, when the ethylene industry experiences an upturn, increased production of 1,3-butadiene as a byproduct passively boosts supply, intensifying sales pressure.

The rapid price surge in China's 1,3-butadiene market over the past three months stems primarily from the following factors:

First, supply contraction. Multiple plants including Shanghai Petrochemical, Maoming Petrochemical, and Sinochem Quanzhou have halted operations for maintenance. Fujian United and Hainan Refining & Chemical also have upcoming maintenance schedules, testing the stability of production supply.

2. Increased export orders, particularly from Southeast Asia and South Korea, have contributed to a tightening market supply-demand dynamic.

3. A sharp decline in imports, preliminarily estimated at over 15% year-on-year. Limited available overseas supply, tightened South Korean exports, and significantly reduced long-distance imports have pushed buyers toward the spot market as contract negotiations remain unresolved, driving up prices.

Fourth, low naphtha cracking margins and persistently falling crude oil prices have kept Asian naphtha cracking unit utilization rates low, further constraining butadiene supply.

Fifth, demand has shown clear recovery, with butadiene rubber and styrene-butadiene rubber industries achieving peak annual capacity utilization in the second half of 2025—a key driver for 1,3-butadiene demand growth.

VI. The traditional Spring Festival in mid-February 2026 prompted rubber product manufacturers to stockpile in January, driving a certain increase in demand.

Regarding future price trends for 1,3-butadiene, short-term upside potential remains, while long-term pressure may emerge, primarily based on the following factors:

I. Pre-Spring Festival downstream stockpiling demand persists, making it difficult to ease the tight supply situation in the short term. Demand-side support remains robust before the holiday.

2. While some facilities scheduled for maintenance restart in late January and February will provide some supply relief, new maintenance plans follow immediately afterward. Consequently, the total supply of 1,3-butadiene in China is not expected to increase significantly.

3. Numerous enterprises face maintenance in the second quarter of 2026, particularly between March and June, suggesting supply tightness may persist.

Fourth, in the second half of the year, the anticipated start-up of Gulei Petrochemical and Huajin Aramco may bring expectations of market expansion, shifting the supply-demand balance toward a more relaxed state.

Regarding 1,3-butadiene profitability, three calculation models were applied: - A model based on purchasing naphtha for cracking to produce 1,3-butadiene - A model based on purchasing crude oil for integrated refining and production of 1,3-butadiene - A model based on producing 1,3-butadiene via oxidation dehydrogenation of n-butene The following conclusions were reached:

First, based on 2025 market conditions, the theoretical profit margin for naphtha cracking is approximately -1%, while the crude oil-based method yields around 12% profit. The oxidation dehydrogenation of n-butene method shows a theoretical profit margin of approximately 1%.

Second, over the 20-year period from 2006 to 2026, the profit margins for 1,3-butadiene production via naphtha cracking and crude oil processing consistently remained at relatively high levels. Specifically, the naphtha cracking margin was slightly higher from 2006 to 2018, while the crude oil processing margin was marginally higher from 2020 to early 2026. This directly correlates with the prevailing strength or weakness of crude oil prices during these periods.

Third, based on the theoretical profit margin calculation for the n-butylene oxidation process for butadiene production, margins remained consistently low from 2006 to 2026, with losses exceeding 50% during certain periods. It should be noted that if calculated based on Huisheng Engineering's process for coal-to-olefins C4 consumption, the n-butylene-based butadiene process is projected to achieve approximately 20% profitability by 2025.

Fourth, future fluctuations in China's 1,3-butadiene profit margins will primarily be influenced by crude oil price volatility, 1,3-butadiene market pricing, and the ethylene industry's cyclical performance. In the short term, 1,3-butadiene prices still have room to rise, with profit margins potentially continuing upward, and purchased naphtha-cracking-based butadiene may become profitable. Long-term, China's chemical industry may enter a high-growth cycle, with increased supply of by-product butadiene potentially squeezing 1,3-butadiene profit margins.

The rapid price surge in 1,3-butadiene over the past three months resulted from multiple factors including supply-demand imbalance, cost support, and market sentiment, with supply contraction and demand improvement serving as core drivers. However, China's consumer market has limited growth potential in the long term, making the likelihood of sustained, historically explosive growth relatively low.

As an integrated internet platform providing benchmark prices, on January 28th, the benchmark price of 1,3-butadiene, according to SunSirs, was 10733.33 RMB/ton, an increase of 28.80% compared to the beginning of the month (8333.33 RMB/ton).

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