Brazil's exports of butadiene (BD) decreased by 15pc in 2022 amid shifts in the country's trade flows and the emergence of new sources of domestic demand.
Brazil exported approximately 170,000 metric tonnes(t) of BD in 2022, down from 200,000t in 2021, according to Argus trade data and Global Trade Tracker (GTT).
Historically Brazil has been a net BD exporter to northeast Asia and North America. In 2022, exports from Brazil started to dip.
Market participants across Asia-Pacific agree Brazil was no longer offering term volumes to the region in 2023, preferring instead to focus on demand in the Americas.
Signs of this shift began to show in 2022 as Brazilian BD exports to the US ramped up by about 50pc from 2021 levels.
In 2022, Brazil exported around 90,000t of BD to the US, a significant increase compared with the approximate 60,000t exported in 2021, according to Argus trade data and GTT. Last year marked the highest year of Brazilian BD exports into the US in a decade.
On the flip side, BD exports to Asia-Pacific declined by more than 55pc to about 30,000t in 2022 from more than 75,000t in the year prior. In 2023 to date, there have been no exports from Brazil to northeast Asia. This lost volume was felt in the market when prices escalated by more than 50pc from 30 December 2022 to a 10 February 2023 assessment of $1,305/t cfr northeast Asia. By March, demand in Brazil and North America was weak, prompting an export of 7,000t to northeast Asia for the first time this year.
Participants have suggested the reason for this is propylene exports from Brazil also dropped off during the same time. In the past, BD and propylene shipments were combined to Asia-Pacific, resulting in a discounted freight rate on larger volumes. Shipping only BD would not have qualified for a lower rate that a combined, larger BD and propylene vessel would command.
Brazil's propylene exports have steadily declined over the years. In 2019, Brazil exported about 30,000t of propylene, representing an almost 50pc fall from 2017 when the country exported 65,000t, according to Argus trade data.
Moving forward, there have been recent changes to BD consumption in Brazil affecting the country's exports. In 2022, emulsion styrene butadiene rubber (eSBR) production capacity was reduced. Then in 2023 a new polybutadiene unit was added. Following these modifications, Brazil's BD demand has increased by up to 40,000 t/yr on a nameplate basis.
Brazil's market will become more balanced with this additional consumption, which may shave its exports.
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