Butadiene Market Trend – Ensuring Mobility

The growing demand for consumer electronics necessitates the manufacturing of peripherals, among others, high investments in construction projects globally that need a steady supply of carpets, paper coatings, roofing, among others, high investments in the automobiles and aeronautical industry that requires the production of fuel lines, hoses and gaskets and high-performance plastics and above all tires as well as consumer goods like footwear and toys which is supported by the increasing availability of disposable income, the expanding middle-income group, an increasing global population and high R&D investment leading to frequent secondary product development and subsequent launches are, among others, expected to drive the Butadiene Market to unprecedented heights and is forecasted by Knowledge Sourcing Intelligence to grow at a CAGR of 1.59% to attain a market size of US$15.815 billion in 2025 from a market value of US$14.386 billion estimated for 2019.

Rural Population (% of Total Population)

Source: World Bank

The rapid rate of urbanization is one of the incremental factors which is anticipated to drive the growth of the market

Urbanization has been known to facilitate the metamorphosizing of the human-made surroundings which are essential to provide the setting for human activities which encompass buildings and parks or green space to neighborhoods and cities that are known to often support infrastructure, Viz. energy networks, water supply among others. In other words, the aforementioned implies that the human-made surroundings are needed to be aesthetically attractive as well as featured with well-developed infrastructure, convenient communication access, accessible by metaled roads and above all residential places with adequate options for shopping, leisure, rejuvenation, and security.

Thus, the expanding ambit of butadiene’s applications also caters to the satisfaction of residents’ socials requirement besides the material and spatial requirements as well. In this regard, urbanization that is an effect of a change in the spatial distribution of population from rural regions to urban regions and supported by private and public investments in most of the requirements previously mentioned, if not all is expected to fuel a healthy growth of the global butadiene market. Hence to provide a contextual overview of urbanization and its capacity to propel the growth of the market during the next few years, it is relevant to note that as per the estimates by the United Nations (the UN) as of 2018  Tokyo was the largest city in the world that registered a population of 37 million residents, which is followed by Delhi that registered a population of 29 million residents, Shanghai that registered a population of 26 million residents and thereafter  Mexico City and São Paulo which registered a population of about 22 million residents. Additionally, Beijing, Cairo, Dhaka, and Mumbai, have reportedly registered 20 million residents each.

Moreover, 1 resident in 8 dwelled in 33 megacities accounting for over 10 million residents. In the USA around 82% of its population resided in urban areas. Also, the Caribbean and Latin America had reportedly comprised a population whereof 81 % resided in urban areas. Further, Europe registered a population whereof 74% resided in urban areas and Oceania had a population whereof 68% resided in urban areas. 2018 also marked the year during which approximately 55 % population live in urban areas. By 2050, the UN forecasts that 68% of the world population will reside in urban areas. Conversely, the population of rural areas is estimated to reduce to 3.1 billion by 2050 from the present estimation of 3.4 billion.

Motor Cars and Other Motor Vehicles Principally Designed for the Transport of Persons, Incl. Station Wagons and Racing Cars , Imports

In Thousands of US Dollars

Source: International Trade Centre

Automotive industry to facilitate the growth of the butadiene market after the economy rebounds from the COVID 19 downturn

The largest single use of butadiene is reported in the process of styrene-butadiene rubber (SBR) production that finds its main application in the manufacturing of automobile tires because it contributes to the improved abrasion and reduced rolling resistance as well as in the production of belts, cables, and O-rings, among others. Besides the most recent effects of COVID 19 have been projected by the United Nations Conference on Trade and Development (UNCTAD) to sustainably slow down the global economy. Further, China has emerged as the central manufacturing hub of many global business operations, that include the automotive sector. As reported in March 2020, UNCTAD estimated that the critical production index of the nation which is the China Manufacturing Purchasing Manager’s Index (PMI) had dropped by approximately 22 points during February this year.

Also, Container vessel departures from Shanghai were significantly lower during the first half of February followed by an increase during the second half of the same month. Nevertheless, the Shanghai Containerized Freight Index reportedly continued to decline which indicated an excess shipping capacity and lower container vessels demand. During the past few years, Chinese manufacturing has emerged as an instrumental part of sustaining the global value chain which is related to a diverse range of industries. Nevertheless, despite such a downward draft in trade conditions, UNCTAD has also estimated that around 23 million passenger vehicles are expected to be manufactured by 2030. Further, UNCTAD also estimates that the importance of oil as a source of energy will diminish which has been substantiated by the recent collapse of prices due to oversupply and weak demand resulting from COVID-19 has given a new push to the demand for raw materials used to manufacture rechargeable batteries intend for effectuating electric mobility.

Additionally, sales of electric cars have increased during recent years as exemplified by a 65% rise in 2018 from the estimates of 2017 which was in the order of 5.1 million vehicles are further anticipated to attain 23 million in 2030, according to the International Energy Agency. Hence, in spite of the economic slowdown that has been brought about by the COVID 19 pandemic spanning almost all industries, the positive forecasts of urbanization and the developments related to the automotive industry, among others are anticipated to, engender an unprecedented market growth.