SunSirs: Supply and Demand Dynamics Coupled with Cost Fluctuations Led to a Downward Trend in 1,3-Butadiene Prices in February

Price trend

According to data from SunSirs' commodity market analysis system, the domestic 1,3-butadiene market experienced a general downward trend in February 2026. From February 1st to 28th, the domestic 1,3-butadiene market price fell from 10,533.33 RMB/ton to 10,026.67 RMB/ton, a decrease of 4.81% during the period. The market trend this month was influenced by a combination of supply and demand dynamics, cost fluctuations, and policy and geopolitical factors, exhibiting clear characteristics of periodic price increases and decreases, with an overall weak and volatile pattern. The supply and demand imbalance in the industry gradually became apparent.

Influencing factors

Cost Side:

From a cost perspective, crude oil, as a core upstream raw material for 1,3-butadiene production, has a high price correlation with 1,3-butadiene. The dramatic fluctuations in the crude oil market this month directly impacted the cost structure of 1,3-butadiene supply, becoming a significant factor influencing the 1,3-butadiene market trend. Geopolitical factors dominated crude oil price volatility this month. The ongoing US-Iran standoff, tensions in the Middle East and Russia-Ukraine conflict, coupled with concerns about the security of the Strait of Hormuz, led the market to factor in geopolitical risk premiums, pushing international crude oil prices upward. NYMEX WTI crude oil prices saw a maximum increase of 17% this year, while ICE Brent crude oil saw a maximum increase of 18.5%. Domestic crude oil futures also showed a volatile but upward trend, with the closing price at the end of the month significantly higher than at the beginning of the month, providing strong support for 1,3-butadiene costs. As of the 27th, the settlement price of the April WTI crude oil futures contract was $67.02 per barrel. The settlement price of the May Brent crude oil futures contract was $72.87 per barrel.

Supply Side:

In February 2026, the domestic 1,3-butadiene supply presented a pattern of "stable release with localized easing." The previously tight supply situation gradually eased, becoming a significant factor influencing the price correction this month. From a plant dynamics perspective, major domestic 1,3-butadiene producers operated smoothly overall, with core companies like Qixiang Tengda maintaining high operating rates and consistently high capacity utilization. This resulted in a high 1,3-butadiene self-sufficiency rate, effectively guaranteeing basic supply. Meanwhile, domestic ethylene plant operating rates remained relatively stable this month, ensuring stable 1,3-butadiene by-product supply. The supply gap caused by previous plant maintenance was gradually filled, improving market sufficiency. In summary, the overall 1,3-butadiene supply trended towards easing this month, with ample supply providing fundamental support for the price correction and establishing a generally weak and volatile supply tone.

As of February 28th, the listed price for 1,3-butadiene from Sinopec's various sales companies was RMB 10,100/ton, a decrease of RMB 500/ton from RMB 10,600/ton on January 29th.

Dongming Petrochemical's 50,000-ton/year 1,3-butadiene unit was operating normally, with 280 tons sold externally at a base price of RMB 10,000/ton.

Satellite Chemical's Lianyungang Petrochemical 90,000-ton/year 1,3-butadiene unit was operating normally, with a listed price of RMB 10,000/ton.

Yantai Wanhua Chemical's Phase II 200,000-ton/year 1,3-butadiene unit was operating normally, with a listed price of RMB 9,980/ton.

Demand Side:

In February, domestic downstream demand for 1,3-butadiene was characterized by "delayed resumption of work, primarily driven by immediate needs, and overall weakness." Insufficient demand support became the core factor restricting market price increases. This month coincided with the Spring Festival holiday, resulting in a generally slow pace of resumption of work for downstream enterprises. Most companies gradually resumed operations around the eighth day of the Lunar New Year. The initial focus was on capacity recovery and inventory management, leading to a delayed release of purchasing demand and a sluggish market trading atmosphere. The synthetic rubber industry performed weakly, with BR and SBR companies maintaining high inventory levels, highlighting the pressure to reduce inventory. Companies adopted a cautious purchasing mentality, only replenishing for immediate needs without large-scale stockpiling, resulting in continued weak demand for 1,3-butadiene. Affected by 1,3-butadiene price fluctuations and raw material cost pressures, synthetic rubber companies' profits were under pressure, with some companies slightly reducing their operating rates, further suppressing the release of 1,3-butadiene demand.

According to data from SunSirs' commodity market analysis system, as of February 27th, the market price of BR in East China was 13,010 RMB/ton, a decrease of 1.81% from 13,250 RMB/ton at the beginning of the month. This was mainly due to increased inventory, falling raw material prices, and insufficient downstream production after the holiday.

Market Outlook

In the short term, the loose supply and demand situation in the domestic 1,3-butadiene market is unlikely to change quickly, and the market will continue to fluctuate weakly. On the supply side, domestic plants will continue to operate stably, and imported supplies will steadily replenish the market, maintaining ample supply. Coupled with the approaching peak maintenance season for ethylene plants in the second quarter, short-term supply may see a slight contraction, but this is unlikely to provide substantial support to the market. On the cost side, geopolitical uncertainties persist, and crude oil prices may remain volatile, providing temporary support for 1,3-butadiene costs, but the cost transmission effect will be limited.

Overall, the domestic 1,3-butadiene market is expected to show a trend of "weak stability with slight rebound" in March, with prices potentially rising slightly, but the increase will be limited. Going forward, it is crucial to closely monitor the progress of downstream resumption of work and production, plant maintenance dynamics, crude oil price trends, and the recovery of end-user demand. If demand shows significant improvement, the market is expected to gradually escape its weak position; otherwise, it will continue its downward trend.

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