SunSirs: Geopolitical Tensions Escalate, Delayed 1.3-Butadiene Shipments Drive Up Prices

On February 28, the U.S.-Iran geopolitical situation deteriorated sharply. The U.S. and Israel jointly launched large-scale military strikes against Iran. Iran immediately retaliated with Operation Storm's End against Israel, Gulf nations, and U.S. military facilities, announcing the closure of the Strait of Hormuz. Regional geopolitical risks have significantly escalated. This conflict impacts the 1.3-butadiene market in several ways:

During the Spring Festival period, both international and domestic prices maintained a fluctuating trend. Supported by rising crude oil prices, post-holiday capital inflows stimulated synthetic rubber futures, bolstering suppliers' firm quotation intentions. However, post-holiday demand recovery fell short of expectations. Additionally, the restart of some production units boosted 1.3-butadiene output, while high BR rubber inventories and sustained pressure on downstream profits led to a market pullback.

On February 28, the market experienced a trend reversal: Amid escalating U.S.-Iran tensions, commodities and downstream synthetic rubber futures surged significantly. Holders hoarded inventory, tightening low-priced supply in the market. On March 2, tensions escalated further as Iran announced the closure of the Strait of Hormuz. Bullish sentiment intensified, with suppliers significantly raising quotes. Downstream buyers, driven by supply concerns, procured based on immediate needs. By March 2, the average delivered price in Shandong reached 10,700 RMB/ton, marking a daily increase of 4.39%.

The Strait of Hormuz handles approximately 30% of global seaborne crude oil and 20% of LNG trade. Its closure intensified market concerns over disruptions to energy and chemical supply chains. From 2022 to 2025, 1.3-butadiene imports are projected to gradually increase, with Middle Eastern supplies accounting for about 16%-28% of total imports. This region serves as one of the supplementary channels for long-distance shipments, though its share has declined in recent years compared to earlier periods. Looking at the 2025 import structure, imports from the Middle East (Iran, Oman, Saudi Arabia) are projected at 93,900 tons, accounting for 17.33% of total imports. South Korea remains the largest source, representing 34.07% of imports. This indicates that the current geopolitical conflict has a noticeable impact on China's 1.3-butadiene supply but is not a decisive factor. Should the conflict escalate, it could lead to shipping delays and port access issues for Middle Eastern cargoes, thereby driving up import costs and domestic market prices.

Overall, heightened geopolitical tensions have triggered significant volatility in international crude oil prices. Combined with shipping disruptions in the Strait of Hormuz, market expectations for reduced refinery operating rates continue to strengthen. Current market rumors about restricted crude oil transportation, tight supply, and potential production cuts at some refining facilities have drawn widespread attention. Supported by concerns over future supply, bullish sentiment prevails, suggesting 1,3-butadiene prices may continue to rise. However, as prices climb, downstream purchasing activity has noticeably slowed. Caution is warranted regarding rapid price increases potentially exacerbating downstream profit inversions. Close monitoring of macro sentiment shifts and actual downstream transaction volumes is essential moving forward.

As an integrated internet platform providing benchmark prices, on March 4, the benchmark price of SunSirs 1.3-butadiene was RMB 10,293.33/ton, an increase of 3.00% compared with the beginning of the month (RMB 9,993.33/ton).

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