02 September 2008 07:53 [Source: ICIS news]
SINGAPORE (ICIS news)--Asia butadiene (BD) prices are likely to remain around the $3,000/tonne level in September despite strong resistance from buyers as supply is expected to tighten with a number of production cuts and turnarounds scheduled by regional producers, traders said on Tuesday.?xml:namespace>
“Supply is going to remain tight into September and October and it is a sellers’ market,” a Korean trader said.
Buyers have been seeking lower numbers around $2,800/tonne on a CFR (cost and freight) NE Asia (northeast Asia) basis but have been stonewalled by Asian suppliers as BD supply is expected to tighten into September and October due to a spate of cuts in cracker operating rates and BD plant shutdowns.
Major Japanese and Korean naphtha cracker operators such as Mitsubishi Chemical and Yeochun Naphtha Cracking Centre (YNCC) had announced production cuts of 5-20% in September and October.
Taiwanese olefins producers, Formosa Petrochemical Corp (FPCC) and Chinese Petroleum Corp (CPC) are also scheduled to shut down their crackers and BD extraction units in September and October.
The tighter supply is expected to bolster the BD price to $3,000-3,100/tonne CFR NE Asia despite robust resistance from buyers.
“Spot offers are expected to hold firm around $3,100/tonne CFR NE Asia as sellers do not have to sell below this level, given that supply will remain tight,” another Korean trader said.
However, talk of deep-sea availability has been circulating the market, with buyers saying they could secure material from ?xml:namespace>
The European BD spot price is currently hovering around $2,400/tonne FOB (free on board)
Buyers said that $2,800/tonne CFR NE Asia was a fair price and indicative of the current market.
However, traders said the European suppliers would more likely consider exporting any surplus spot material to the
“European suppliers can sell to the
In the meantime, the stand-off continues between the buyers and sellers, with both parties unwilling to budge from their respective positions.
“A clearer price direction will emerge in the coming weeks when the downstream butadiene rubber (BR) producers settle the fourth-quarter BR contracts,” a customer said.
“If Q4 [fourth quarter] BR contracts were to be settled above $3,600/tonne, then it would be likely that the BD producers would not sell BD below $3,000/tonne,” he added.
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