[Click eStock] "Petrochemical, Butadiene Chain Expected to Strengthen"

On the 5th, Eugene Investment & Securities stated that the butadiene chain is expected to strengthen in the refining and petrochemical sector.

Researcher Hwang Seong-hyun said, "As of the third quarter, ethane prices are trading below 20 cents per gallon due to the decline in natural gas prices," adding, "The production costs of North American steam crackers, which use ethane as the main raw material, are also on a downward trend, highlighting the margin improvement of U.S. chemical companies."

He further analyzed, "Due to the price difference of raw materials, the number of regional naphtha cracking centers (NCC) substituting liquefied petroleum gas (LPG) is increasing," and "this causes an increase in ethylene yield and a decrease in butadiene production."

He continued, "While downstream operating rates have not fully recovered, regional PE inventories have surged since February, and currently, the LPG (C3/C4) price trend aligns with that of naphtha, raising questions about whether the incentive for substitution will continue in the long term," but emphasized, "Considering that new production capacity is limited and supply and demand will tighten from March due to scheduled maintenance, the expectation of strength in the butadiene chain remains valid."

He also predicted, "Since the price increase of downstream products such as ABS (Acrylonitrile Butadiene Styrene) and SBR (Styrene Butadiene Rubber) has been limited compared to butadiene, there is greater potential for price increases if demand improves."

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