Chemical Market Associates, Inc. (CMAI) announces the completion of the 2011 World Butadiene Analysis, an annual global study that covers historical trends and future projections for supply, demand, production, capacity, trade, pricing and profitability of the global butadiene industries for the period 2005 to 2015.
Included with each analysis is 12 months access to CMAI's online capacity and supply/demand databases with a mid-term supply/demand update, incorporating CMAI's latest market outlook. The analysis is a necessary resource for business managers and planning professionals who need to make strategic business decisions in a rapidly changing global economic and market environment.
Current Market Situation
Trends in crude C4 production from ethylene crackers are a function of cracker operating rates and feedstock selection. The value of crude C4s to ethylene producers is not enough for changes in the C4 olefins markets to impact decisions about either cracker operating rates or feedstock selection. As a result, the tightness in the global butadiene markets has done nothing to reverse the global trend toward lighter cracker feedstocks that produce less crude C4. This has been especially important in North America, but crude C4 availability has become a significant market dynamic in parts of Asia as well.
Global butadiene markets have shifted substantially over the last decade; in fact, the past three years have been quite a rollercoaster ride. Markets have alternated between extremely tight and very loose conditions, at times within a few months. The global recession caused demand to drop in the major consumption regions back to levels not seen for many years. For example, the 2009 U.S. butadiene demand volume was the lowest since 1985. Globally, butadiene demand dropped to just above the 2003 level. However, the recovery has been extremely inconsistent with rapid demand growth in the developing world, especially China, and relatively stagnant demand growth in the developed world.
The vast majority of crude C4 will continue to be sourced from ethylene crackers over the forecast period so trends in that market will heavily influence butadiene feedstock supply. By 2013, a significant geographic shift in the ethylene market, which has been underway for the past few years, is expected to be completed. At that time, Middle East ethylene production is expected to account for nearly 20 percent of the global total, up from around ten percent in 2005. Ethylene production in the Asia Pacific region will increase from roughly 30 percent of the global total to about 35 percent over the same time period. It is interesting to note that in 2005, ethylene production in North America exceeded the production volumes of each of these regions; but by 2013, North American production levels will be lower than in Asia and roughly the same as in the Middle East.
Global butadiene capacity utilization dropped by more than 10 percent between 2007 and 2009, primarily as a result of the economic downturn. However, even beyond the economic recovery phase to 2015, operating rates will likely remain below pre-recession levels. There are several reasons for the expectations of lower operating rates, including new capacity in some regions and feedstock shortages in others. In most cases, low operating rates like these would indicate weak market conditions; however, simply analyzing capacity utilization on a global basis obscures many of the regional issues critical to butadiene producers. For example, utilization rates in North America will be substantially different from those in Europe and Asia.
To find out more about the market issues and CMAI's outlook for this industry, order the 2011 World Butadiene Analysis now at our website. The analysis is presented in book and CD-ROM format, along with access to CMAI's online capacity and supply/demand databases. Updates to the capacity database are available to clients throughout the year as they occur, and a bi-annual update to the supply/demand database provides a fresh view as the markets develop. Clients benefit from the up-to-date market information which is necessary for strategic business decisions.