Butadiene gets squeezed

Source: ECN


Global dynamics in butadiene markets are putting Europe under pressure, with supply challenges likely in the longer term

Although Asia has been the power-house for the global butadiene (BD) industry in recent years, mature markets are now under the spotlight. Not only is demand influencing BD investment, but the changing feedstock situation is increasingly a challenge. Since 2005, North America has shifted to lighter steam cracker feedstocks and as a result produces proportionately less BD and mixed C4s than, for example, western Europe. This has resulted in rising crude C4 prices in North America, and an increase in imported crude C4 and BD from western Europe and other regions.


 Copyright: Simon Blackley

The BD market in western Europe has historically been oversupplied. Therefore, producers in western Europe either export crude C4 or produce additional BD for export. During the economic downturn, demand for BD in western Europe remained reasonably robust compared with other regions, aided by BD prices remaining well below those in the US and Asia. The high level of integration between BD producers and derivative manufacturers in western Europe also contributed to stable demand.

However, it is anticipated that exports will be higher for 2012 due to reduced consumption of BD in Europe as a result of the turbulent economy within the eurozone.

Western Europe is one of the world's major BD producers, accounting for around 20% of global supply in 2011. However, much of the installed BD extraction capacity in western Europe is old, and therefore not capable of operating at high rates for long periods of time. Also, after the prolonged oversupply of BD in the 1990s, many operators in western Europe invested in selective hydrogenation capability, therefore destroying a proportion of BD contained in the crude C4 stream, to generate butenes.

Nevertheless, in recent months a number of announcements regarding capacity expansion and new projects have occurred in western Europe. Combined, these projects total 425,000 tonnes/year of BD and include:

  • By the fourth quarter of 2013, Netherlands-based LyondellBasell will expand BD capacity at its extraction unit in Wesseling, Germany, by 40% to 238,000 tonnes/year;
  • By 2014, Germany-based chemical maker BASF plans to build and start operation of a 155,000 tonne/year BD extraction plant at its site in Antwerp, Belgium;
  • Italy-based Versalis will build a new 70,000 tonne/year BD unit at its site in Dunkirk, France for start up around the beginning of 2015;
  • And by 2014-2015, Hungarian plastics manufacturer TVK will complete a 130,000 tonne/year BD extraction unit in Tiszaujvaros, Hungary.

Some of these projects will bring some contained BD to market that has hitherto been hydrogenated, although others will tie up crude C4 in Europe that has previously been available on the merchant market therefore creating challenges for BD producers in both Europe and North America that are currently deficit in C4s.


European producers that purchase crude C4 will face a squeeze in availability, but more significantly North America will face a continued decline in domestic C4 production, while the availability of imports will also decrease. More BD will be available for export from western Europe, although Asian buyers will also be bidding for this cargo.

Global BD consumption is expected to approach 11m tonnes in 2012, representing growth of around 5% over 2011. BD is used as a feedstock in the production of a variety of synthetic rubbers and polymer resins; the automotive industry, mainly tyre production, is the main consumer of BD derivatives. Over 50% of total BD is consumed in the production of butadiene rubber (BR) and styrene butadiene rubber (SBR), which are used primarily in tyre production - over two-thirds of BR and approximately 75% of SBR is consumed in tyre production.

Aside from applications such as conveyor belts, much of the remainder of SBR demand is for other automotive applications such as drive belts. Thus, the BD market is essentially driven by the automotive sector and demand for tyres resulting in global growth rates typically closely tracking GDP and consumer spending.

Other derivatives of BD include acrylonitrile-butadiene-styrene (ABS), styrene-butadiene (SB) latex, hexamethylene diamine, etc. ABS, a high-volume engineering polymer, is favoured for its strength, wear resistance and attractive finish and also has exposure to the automotive industry through its use in components for automotive applications, as well as housings for electrical appliances and various household and communications products.

Asia now accounts for over half of global BD consumption, as well as accounting for nearly half of global BD capacity. Western Europe is the world's major exporting region, shipping mainly to the US, but also to Asia. The Middle East exports a much smaller quantity of BD, mainly to Asia. Asian demand for BD and its derivatives has soared due to its own fast growing automotive markets, and the production of tyres for export. China, Japan, South Korea, Central Europe and Thailand export approximately 50% of their tyre production to the US, western Europe and other countries. BD is predominantly sourced by extraction from the mixed C4 stream produced in steam crackers. The yield of C4 from the cracker and the composition of the C4 stream vary considerably dependent on feedstock and severity of operation.

Although, the yield of C4 is only a small fraction of the steam cracker output, over 95% of BD is produced as a co-product from ethylene production, following separation of BD by extractive distillation from the recovered mixed C4 stream. The balance of BD production is via dehydrogenation of butane or butylenes.

Stewart Hardy is a senior consultant for Nexant