Butadiene oversupply in Asia is refuted

08 December 2003 00:00  [Source: ACN]

BUYER and trader-generated rumours of butadiene oversupply in Asia in 2004 were dismissed by an industry observer who argued that demand growth would mean that the region’s deficit would increase.

The oversupply argument is partly based on new Asian startups, which comprise a further 50 000 tonne/year by Maoming Petrochemical, an extra 10 000 tonne/year by LG Petrochemical and a 20 000 tonne/year increase by Kumho Petrochemical.

And the other argument being used was that the startup of the 408 000 tonne/year Sabina Petrochemicals plant in Port Arthur, Texas, US, due for Q1 next year, would drive down Asian pricing.

However, on Asian demand growth versus this region’s extra supply, the industry observer forecast that Asian production in 2004 would be at 3m tonne against consumption of 3.1m tonne. This would compare with this year’s estimated consumption of 2.99m tonne over production of 2.94m tonne.

Dealing with Sabina, he said: ‘Some of the 300 000-350 000 tonne/year European butadiene that currently goes to the US and Mexico will be replaced by Sabina. This spare European volume could be available for Asia, although I do not believe it will be sufficient to push Asia into oversupply, given the strength of demand growth.’

He added that he believed that there was insufficient crude C4s in the US to run all the butadiene capacity, including Sabina, at full rates which would mean that there might still be the need for European imports.

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