Rapid growth to continue in global butadiene market until 2018, driven by growing demand in APAC

Butadiene (1,3-butadiene) is a colorless gas that is condensed to liquid just below minus 4.0°C and is highly reactive. It is soluble in alcohol and ether but insoluble in water, and is polymerized easily in the presence of oxygen. It is obtained as a byproduct of the manufacture of ethylene and propylene by selective distillation of cracked naphtha or gas oil stream. Butadiene is an important feedstock to manufacture chemicals and materials that further serve diverse industries including automotive, paints, textile, appliance manufacturing and others. Its main application segments include Styrene-Butadiene Rubber SBR, Polybutadiene Rubber (PBR), Acrylonitrile Butadiene Styrene Resins (ABS), Styrene Butadiene Latex (SB Latex), Adiponitrile, and Nitrile Rubber (NR).

As per Research and Markets, this market has grown considerably during the past few years and is expected to grow at a rapid pace in the next five years, driven by growing demand in the Asia-Pacific region. Asia-Pacific is the biggest consumer of butadiene, followed by Europe and North America, which consumed more than half of the total global demand in 2012. China is the biggest consumer of butadiene, and is also among the fastest growing markets with a CAGR of about 6.2% from 2013 to 2018. The European and North American markets are comparatively mature with a demand growth well below the average market growth. Asia-Pacific is the world's largest market of butadiene, which consumed more than half of the total global demand, and also for most of its derivatives that includes styrene butadiene rubber (SBR), polybutadiene rubber (PBR), acrylonitrile butadiene styrene (ABS), and nitrile rubber (NR). Various countries in Asia-Pacific are ahead of them all to implement butadiene and its downstream derivatives in a diverse range of applications. Demand growth of butadiene in the region is projected to be well above the average growth rate of the market. China and South Korea are the biggest consumers of butadiene in the region while India and China are expected to be the fastest growing Butadiene Market. A few of the reasons for the high level growth in this region are growing population, vast economies-developed as well as developing, and favorable investment policies and government initiatives to promote industrial growth. The budding nature of the economies and rising consumption trends for various materials such as synthetic rubbers and ABS resin drives the demand of butadiene at a significant pace in the region.

As per marketsandmarkets.com, butadiene is a major feedstock to manufacture SBR, with just less than one third of its total global demand being consumed to manufacture SBR. Butadiene demand by SBR manufacturers is quite high in USA, followed by China, South Korea and Japan. Subsequently, PBR manufacturers were the second largest consumers of butadiene with a butadiene consumption share difference of 2.4%, compared to SBR manufacturers. The PBR manufacturing segment is also the fastest growing end-use segment with an expected CAGR of about 4.9% from 2013 to 2018. Butadiene is majorly consumed by PBR manufacturers in countries that include China, U.S., South Korea, Japan, Russia, etc. Growth of the SBR & PBR market is largely associated with the growth in the automotive industry globally. The automotive industry is expected to push the tire industry to new heights, which in turn will help the styrene butadiene rubber and polybutadiene rubber market achieve greater volumes and revenues in the near future; hence this drives the demand for butadiene at a significant pace.

Butadiene has been indispensable for a range of important industrial and consumer products for decades. Even though mostly invisible to the eye of the consumer, this preliminary product of the petrochemical industry can be found in computers, carpets and various rubbers. Its use in tyres causes butadiene to be a basic product for the growing transportation industry. In 2012, however, indications multiplied that demand for butadiene declines due to slow economic development in downstream industries, the production of tyres in particular. This was reflected in the price for butadiene, which fell considerably in all regions since the end of 2012. According to analysts at Ceresana, this slowdown will only be temporary; the market for butadiene is expected to grow again in the future. In 2020, approx. 13.7 mln tons of butadiene will be processed by downstream industries. More than half of total demand for butadiene is generated by producers of styrene-butadiene rubber (SBR) and polybutadiene (BR). Almost 70% of these products are processed by the tyre industry. Another important application is the engineering plastic acrylonitrile butadiene styrene (ABS), which is used in, for example, vehicle parts and casings for office equipment such as computers. Latex based on butadiene is utilized for carpets and paper coatings. Asia-Pacific has for some time now been the major consumer of butadiene and increased its share of the global market to more than 50%. This region is expected to continue to grow, development in individual countries, however, is likely to be heterogenous: China is projected to experience dynamic development, even though growth rates will not be as high as they had been in the past. The highest growth rate of more than 16% p.a. Ceresana forecasts for India, due to the rapidly growing processing industry in this country. Already saturated markets such as South Korea and Japan, on the other hand, are anticipated to generate only moderate growth rates. Until now, butadiene was mainly obtained as a by-product of ethylene production. Depending on the raw material used, the quantity of butadiene produced in steam crackers varies. In comparison to the crude oil-based naphtha, natural gas-based ethane contains little C4, causing butadiene yields in ethane production to be low. This is reflected in the USA, where innovative fracking technology has led to shale gas being increasingly used as feedstock. As a result, production volume of butadiene fell. Thus, relative availability of feedstocks influences production potential of butadiene. Low butadiene yields of shale gas are expected to be overcompensated by an innovative method based on butane dehydrogenation. In the course of the creation of additional ethylene capacities, production capacity of butadiene increased considerably over the past years as well. Additional capacities met an increasing demand, which only slowed during the global economic crisis in 2008-2009 and reached a new maximum in 2012. In the future, the larger part of new capacities will be created in Asia-Pacific that also is likely to see the highest increase of demand. Ceresana does not foresee surplus capacities or continuing price erosion of butadiene on the medium- and long-term.