Butadiene        

*Millions of pounds per year of finished butadiene capacity. Virtually all butadiene is produced as an ethylene steam-cracking coproduct, with yield depending on feedstock. Not included above is Texas Petrochemicals' capacity (460 million pounds) to produce butadiene by butylene dehydrogenation. This unit is presently idle, as economic conditions do not justify its operation.

In the summer of 2001, Texas Petrochemicals completed a 300-million pound expansion of its butadiene extraction capacity at Houston, raising its total site capacity to 1.2 billion pounds.

In 2003, Sabina Petrochemicals, a 60/24/16 joint venture between Shell Chemical Company, BASF and AtoFina, will bring online the world's largest butadiene extraction unit, 900 million pounds, in Port Arthur, Tex. This is adjacent to the AtoFina refinery and the joint venture steam cracker completed by BASF and AtoFina last year.

Equistar Chemicals is the JV that Lyondell Petrochemicals and Millennium Chemicals formed in 1997. In 1998, Occidental Chemical merged its olefin business into Equistar.

Amoco merged with British Petroleum to become BP Amoco in 1998. In July 2000, BP Amoco Chemicals reverted to the name BP Chemicals after BP Amoco decided to adopt a new unified global brand, centered on the name BP. The new name embraces British Petroleum, Amoco, Arco and Burmah Castrol, all acquired by BP.

Elf Atochem merged with TotalFina, to form AtoFina in 2000.

Profile last published 3/6/00; this revision, 3/25/02.

DEMAND
1999: 5,204 million pounds; 2000: 5,488 million pounds; 2004: 5,130 million pounds, projected. Demand equals production plus imports (1999: 571 million pounds; 2000: 683 million pounds) less exports (1999: 4 million pounds; 2000: 3 million pounds).

GROWTH
Historical (1995 - 2000): 2.3 percent per year; future: (minus) -1.7 percent per year through 2003.

PRICE
Historical (1995 - 2000): High, $0.26 per pound, contract, tanks, del., Gulf; low, $0.18, same basis. Current: $0.16, same basis.

USES
Elastomers, 61 percent (styrene-butadiene rubber (SBR), 32 percent; polybutadiene, 23 percent; polychloroprene, 4 percent; nitrile, 2 percent); styrene-butadiene latex, 12 percent; adiponitrile for HMDA, 11 percent; ABS resins, 5 percent; miscellaneous, 11 percent.

STRENGTH
On a global scale, butadiene capacity is being added at an annualized rate of 2.5 percent. More than 580,000 tons of new capacity will come online in Northeast Asia between 2001 and 2006, but global demand is growing at an annualized rate of 3.9 percent and will outpace capacity additions. As the US economy continues rising from its recession, the present long butadiene market should become firmed. Inventories are low and will have to be rebuilt sometime soon.

WEAKNESS
US demand for butadiene dropped by more than 12 percent last year. The economic recession has affected butadiene production more severely than that of any other olefin because butadiene-based elastomers and plastics, which end up primarily in the transportation and construction industries, account for about 80% of the butadiene market. Though the US is still the world's largest importer of finished and crude butadiene, the market remains under pressure because of the continued strengthening of the dollar and the low cost of natural rubber relative to synthetic.

Natural rubber is at a 30-year pricing low, making it 7 to 10 cents per pound cheaper than synthetic rubber derived from butadiene. Synthetic rubber is around 38 to 41 cents per pound for commodity grades, whereas natural rubber is around 30 cents. However, synthetic rubber is favored for many applications because its quality is more consistent. Rubber manufacturers are also striving to minimize their inventories of butadiene-based rubber until demand picks up and it becomes clear that butadiene has reached its floor price. Synthetic rubber accounts for two thirds of the total demand for butadiene.

OUTLOOK
Elastomers will continue to be the largest consumer of butadiene and should maintain their position of 61 percent of total consumption. However, they are mature products that are heavily reliant on the automotive industry. Adiponitrile/hexamethylenediamine (HMDA), styrene-butadiene (SB) copolymer latex, acrylonitrile-butadiene-styrene (ABS) resins, styrenic block copolymers and other smaller polymer applications will grow faster than the elastomers (excluding polybutadiene), but they each account for only 5-10% of the total butadiene market. With a projected negative average annual growth of -1.7 during 2000-2004, the total market for butadiene in 2004 will reach 5.1 billion pounds, or about about what it was in 1998. This takes into account the big hit in demand in 2001.