In August 2026, the domestic butadiene market experienced a significant upward trend, showing an overall operating pattern of sustained high in the first half of the month, slight correction at high levels in the second half, and a significant monthly increase. The market price increased from 10016.67 yuan/ton at the beginning of the month to 12166.67 yuan/ton at the end of the month, with a cumulative increase of 21.46% during the period.
The core driving force of the August market trend comes from the shortage of spot goods caused by the centralized maintenance of supply side equipment, coupled with the strong support of crude oil and naphtha raw material costs, and the strong market sentiment of reluctance to sell and support prices, which has driven prices to rise rapidly. But after rising to a high level, downstream deep processing enterprises faced profit pressure and high price resistance, and the demand for essential goods continued to tighten. At the end of the month, with some equipment resuming production and the supply of goods slightly easing, the market experienced a moderate decline, presenting a typical structural upward trend of “strong supply, weak demand”. The long short game gradually intensified.

Cost aspect: In August, international crude oil was supported by the geopolitical situation and supply and demand fundamentals, and the overall operation was relatively strong. Upstream naphtha prices rose synchronously, continuously increasing the production cost of cracking to produce butadiene, and building a solid bottom support for the domestic butadiene market. At the same time, the overseas butadiene US dollar quotes have steadily increased, the cost of imported goods has significantly increased, the arbitrage window between domestic and foreign markets has closed, and the efforts to replenish overseas goods have weakened. Although the increase in butadiene prices this month far exceeded that of downstream rubber and plastic categories, and the profits of the industrial chain shifted upstream, downstream processing profits continued to be compressed. However, the high prices of upstream raw materials remained firm without a significant decline, and the favorable cost side continued throughout the month, effectively locking in the deep decline space of the butadiene market and providing important basic support for this round of price increases. As of August 27th, the settlement price of the October WTI crude oil futures contract in the United States was $83.53 per barrel, and the settlement price of the November Brent crude oil futures contract was $88.52 per barrel.
Supply side:
The overall tight supply of butadiene in the domestic market in August was the core factor driving the sharp rise in the market. Multiple mainstream butadiene cracking units in China have entered the maintenance cycle, with key units such as Yanshan, Yangzi, Sirbond, and Hainan Refining and Chemical undergoing phased shutdowns. The overall operating rate of the industry has significantly declined, and the circulation of domestic spot commodities has significantly contracted. In terms of imports, constrained by high prices from foreign markets, traders have a low willingness to import, resulting in a shortage of monthly arrivals at ports. Port inventories continue to deplete and remain at a low level. At the same time, some domestic goods are flowing into the export market, further compressing the domestic available spot quantity, and traders have low inventory and strong reluctance to sell and raise prices. Part of the equipment that underwent maintenance in the early stage of the month has been restarted and resumed production, resulting in a slight increase in market supply and easing of the tense situation. The increase in high priced goods has driven a slight correction in prices at the end of the month, temporarily reversing the unilateral upward trend.

Demand side:
This month, downstream demand for butadiene has shown significant structural differentiation, with limited overall rigid demand support and weak high price absorption. The rubber market has a significant off-season characteristic, which has formed rigid constraints on raw material demand. In terms of the rubber sector, the domestic natural rubber and synthetic rubber markets experienced overall fluctuations in August. Natural rubber was slightly strengthened due to the disturbance of rainfall in production areas and limited supply of raw materials, but the terminal transmission was weak; Shunding rubber and styrene butadiene rubber rely on the advantage of low-priced raw material substitution, and the industry maintains a medium to high level of production, forming a stable and essential demand support for butadiene. However, the tire terminal is in the traditional off-season of consumption, with slight fluctuations and overall low operating rates of all steel and semi steel tires in China. The inventory of finished products at the terminal continues to be high, and downstream car companies and auto parts processing factories have weak orders. The industry as a whole is mainly focused on rigid demand production, with no concentrated increase in production. At the same time, the significant price increase of butadiene within the month continues to compress the processing profits of rubber enterprises, putting pressure on the profits of synthetic rubber manufacturers. There is a strong resistance to high priced raw materials, and most enterprises insist on the mode of procurement and replenishment to avoid the risk of raw material price fluctuations. Except for the rubber category, chemical deep processing categories such as ABS and SBS have been in a long-term loss making state, and the increase in raw material prices has further squeezed the processing profits of enterprises. The industry has generally reduced its burden and production, and the demand for raw material procurement continues to shrink. After the price of butadiene surged within the month, the downstream industry’s wait-and-see sentiment quickly heated up, and market transactions significantly weakened, becoming the main negative factor restricting the sustained upward trend of the market and driving the price correction at the end of the month
Market forecast:
From the perspective of comprehensive supply and demand as well as cost fundamentals, the domestic butadiene market is likely to maintain a high and wide range of fluctuations in September. On the positive side, the cost support of upstream crude oil and naphtha remains stable. With the traditional “Golden Nine” consumption peak season starting, tire terminal demand is expected to gradually recover, and there is an expectation of a rebound in rubber category production. There may be marginal improvement in essential procurement; Negative factors are also prominent, and subsequent maintenance equipment will continue to resume production, gradually releasing market supply increments. Coupled with weak profits in downstream deep processing industries, enterprises lack the ability to accept high priced raw materials and are cautious about purchasing, making it difficult for demand to see significant volume increases. Overall, the butadiene market is supported by costs and low inventory in the early stage, with limited risk of a sharp decline. However, the upward space will be suppressed by both supply growth and weak demand, making it difficult to reproduce a unilateral surge trend. The focus will be on tracking the progress of equipment resumption, fluctuations in crude oil prices, downstream production and changes in essential procurement in the future.