FocusAsia BD may fall in March as supply rises

18 February 2008 04:00  [Source: ICIS news]

By Helen Yan

SINGAPORE (ICIS news)--Butadiene (BD) spot prices in Asia are likely to fall in March from its early February peak of $1,900/tonne CFR (cost and freight) northeast Asia (NE Asia) as end-users in Taiwan, China and Korea rejected March offers above $1,800/tonne, buyers and traders said on Monday.

Spot offers fell to $1,850/tonne CFR NE Asia last week as resistance to any further price hike stiffened with the impending arrival of about 40,000 tonnes of deep-sea material from Europe and the US into Asia in the coming months.

"The market is now turning bearish and the bull run has come to an end," a Japanese trader said.

About 12,000 tonnes of deep-sea product from Europe were expected to arrive in China alone in March and April, with the rest destined for the other countries in the region including South Korea and Japan, traders said.

Supply has also eased with the delivery of the first 1,700-tonne contract cargo from Titan Chemicals’ new 100,000 tonne/year BD extraction unit in Johor, Malaysia, to Korea Kumho Petrochemical Co (KKPC), a major styrene butadiene rubber (SBR) and butadiene rubber (BR) producer.

"The first contract cargo from Titan has arrived and we will use it for SBR production," a KKPC company source said.

The month-long delay in Titan’s start-up and the unexpected three-month shutdown of Mitsubishi Chemical’s 476,000 tonne/year No 2 cracker at Kashima, triggered an unrelenting upward rise in BD spot prices in Asia.

BD spot prices in Asia skyrocketed by about $600/tonne since November last year to hit $1,900/tonne CFR NE Asia recently, according to global chemical market intelligence service ICIS pricing.

End-users in the downstream SBR, styrene butadiene latex (SBL), acrylonitrile-butadiene-styrene (ABS) and thermoplastic elastomer (TPE) sectors have, for weeks, been threatening to cut operating rates if the BD price hikes were to continue.

"The unrelenting price hikes in the BD price are not sustainable and we will consider cutting operating rates at our SBL plant, if the BD prices were to continue to rise," an SBL producer said.

Spot offers above $1,800/tonne CFR NE Asia were unacceptable, a Chinese SBR producer said, adding that supply has eased and that several spot cargoes were available.

Several SBR producers in China, Taiwan and Korea have rejected spot offers of $1,850/tonne CFR NE Asia for March loadings.

"The shore tanks in China are full, and there is no way Chinese end-users will accept spot offers above $1,800/tonne," a Chinese trader said, adding that end-users have stocked up inventories and that the price hikes cannot continue any further.

For more on butadiene visit ICIS chemical intelligence

By: Helen Yan
+65 6780 4359

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