Core Viewpoint - The recent price increase of butadiene in China is driven by a combination of supply-demand dynamics, downstream demand recovery, policy benefits, and improved international trade conditions, indicating a systemic restructuring of the butadiene market [1][2]. Supply Dynamics - Sinopec raised the ex-factory price of butadiene to 11,100 yuan per ton, an increase of 800 yuan from the previous trading day, with prices in Shandong and East China reaching new highs in nearly five years [1]. - The current market shows a significant supply-demand imbalance, with a notable supply shortage due to maintenance of several production facilities, resulting in a monthly supply reduction of 50,000 tons [2]. - The unexpected shutdown rate of domestic butadiene facilities reached 12.7% in the first five months of this year, an increase of 4.3 percentage points compared to 2024, contributing to supply chain tightening [2]. Demand Dynamics - The downstream market for butadiene exhibits a dual trend, with traditional sectors like styrene-butadiene rubber and ABS resin facing production cuts due to cost pressures, while high-end applications see surging demand [3]. - In the automotive sector, the demand for hydrogenated nitrile butadiene rubber (HNBR) is increasing due to lightweight requirements, with specialized materials priced at 38,000 yuan, a premium of 120% over general materials [3]. - The aerospace materials sector is also experiencing over 30% growth in the application of specialty butadiene copolymers for seals and hoses [3]. Market Outlook - Analysts suggest that the primary driver of butadiene price increases in the short term is supply contraction, while the medium-term focus should be on the sustainability of downstream ABS capacity expansion [3]. - The rapid development of electric vehicles and smart home appliances is expected to continue boosting demand for ABS resin, further supporting the butadiene market [3].