Chemical Market Associates, Inc. (CMAI) has completed its 2008 World Butadiene Analysis, an annual market study that provides clients with an outlook for the butadiene and derivatives industries for the period 2002-2012. CMAI experts forecast the 2008 through 2012 period will experience a butadiene demand growth rate of just under 3.5% pa, slightly higher than the 3.2% annual rate experienced over the past five years. Global demand for butadiene consumed into ABS resin production is estimated to grow at a high annual rate of around 5%, due to heavy use of thermoplastics in the manufacture of computer equipment and other appliances, mainly in China. Butadiene based nylon production, through adiponitrile, will also grow at about five percent per year. However, worldwide demand for butadiene in its largest end-use sector, the production of commodity-based synthetic rubber and latex, is anticipated to average around three percent per year.
As previously forecast by CMAI, crude C4 supply dynamics will continue to vary among regions and countries. In Asia, naphtha is expected to remain the most common feedstock for steam crackers, creating significant supplies of crude C4. However, increasing amounts of lighter feedstocks, like butane, will be used in the region which will have an impact on the region's crude C4 balance. Additionally, some crude C4 that has been imported to the region will no longer be available at the end of 2007, creating a new issue for the crude C4 balance in the Asian market. Naphtha will remain the most common feedstock for steam crackers in Europe, with some crude C4 destroyed to dispose of surplus production. In the future, even more European crude C4 will be hydrogenated for use in high-value applications, such as octene-1, isononyl alcohol, and butene-1. In North America, steam cracker feed slates will vary at times, depending upon relative production economics. However, heavier steam cracker feedstocks with higher butadiene yields (naphtha, for example) are expected to be at a significant economic disadvantage over the forecast period which will reduce domestic crude C4 production. Additionally, North America is expected to have availability issues with affordable crude C4 imports which will limit the region's finished butadiene production over the entire forecast period.
New price-setting mechanisms for the global butadiene industry are continuing to evolve, with Asia replacing North America as the global price-setting region. In recent years, Asia has emerged as a large net importer of butadiene and butadiene derivatives. Since 2004, the spot price of butadiene in Asia has been a very significant factor in rising butadiene prices throughout the world. Longer term, the butadiene price in Asia will have to be high enough to justify continued investment in extraction capacity to meet the growing demand for butadiene derivatives. The butadiene price in West Europe will be determined by the competitiveness of its domestic derivative production since the region's exposure to the global butadiene markets will be reduced. Therefore CMAI expects the butadiene price in the region to be only slightly higher than the price in Asia. North America will remain a significant importer of both butadiene and crude C4 throughout the forecast period. This will require the butadiene price in the region to be higher to attract imports. Our current outlook is for the butadiene price in North America to be the highest in the world through 2012.
The 2008 World Butadiene Analysis is available in book or CD-ROM format.