European petrochemical producers pivot to raffinate over butadiene

European petrochemical producers are increasingly focusing on raffinate-1 rather than butadiene extraction, as strong MTBE production economics support demand for the co-product, market participants said in the week to Oct. 12.

Raffinate-1 and butadiene are commonly produced from the crude C4 cut in Europe via a distillation-extraction process: butadiene is extracted, and raffinate-1 is what remains. In further process, the isobutylene portion in raffinate-1 is separated and reacts with methanol to produce MTBE.

With European butadiene domestic demand remaining subdued and export opportunities beginning to revive, producers have shown a growing incentive to secure crude C4 for its raffinate-1 content, which can be used to manufacture MTBE.

The shift is visible in spot prices. On Oct. 9, raffinate-1 CIF Northwest Europe reached $1,165.19/mt, based on a naphtha factor of 1.26 and the same-day naphtha at $924.75/mt, moving $7.94/mt above butadiene FOB Rotterdam at $1,157.25/mt. The move marked raffinate-1's relative strength over export butadiene, reversing a previous trend that had been sustained for 10 weeks since July 31, 2026.

Raffinate-1 nevertheless remained $94.36/mt below domestic butadiene FD Northwest Europe, which was assessed at €1,125/mt ($1,259.55/mt). The resulting price structure — raffinate-1 above export butadiene but below domestic butadiene — highlights the contrasting pull from the two downstream chains.

The change was driven primarily by demand for MTBE from raffinate-1. European MTBE remained supported by limited Asian imports, constrained tanker availability and favorable gasoline blending economics.

"[There are] good margins on MTBE," one producer said. They also said that "people buy crude C4 for raffinate-1, butadiene can't work."