Asia’s November BD price set to fall $100/tonne

23 September 2008 09:54  [Source: ICIS news]

SINGAPORE (ICIS news)--Asia butadiene (BD) prices are likely to fall about $100/tonne to $2,800-2,900/tonne in November due to slowing demand and surplus supply from China, traders said.

 

About 4,000-5,000 tonnes of BD from China are expected to be available in October and November as several downstream butadiene rubber (BR) and styrene butadiene rubber (SBR) producers had scheduled maintenance shutdowns, thus freeing up surplus Chinese BD into the Asian spot market.

 

Despite a spate of run rate cuts by cracker operators, including Mitsubishi Chemicals and Yeochun Naphtha Cracking Center (YNCC) in Japan and Korea, BD spot prices have fallen by $400/tonne since July to $2,900-3,000/tonne on a CFR (cost and freight) NE Asia (northeast Asia) basis for October shipments.

 

BD spot prices peaked at $3,400/tonne on a CFR NE Asia basis in July, according to global chemical market intelligence service ICIS pricing.

 

However, the recent surplus cargoes from China had further depressed prices, with two spot lots amounting to some 3,000 tonnes, sold to Korea and Japan at $2,900-2,950/tonne CFR NE Asia for October arrival, buyers said.

 

“We can wait for prices to fall further and we may consider buying spot cargoes if prices drop below $2,800/tonne CFR NE Asia in November,” a downstream Korean synthetic rubber producer said.

 

Another derivative Taiwanese synthetic rubber producer also expressed the same sentiment, saying he could wait for prices to fall further to around $2,800/tonne CFR before coming into the spot market.

 

Downstream synthetic rubber producers had been pressing for lower BD prices in light of the drop in demand for synthetic rubber in the fourth quarter as the sales of cars and trucks had slowed down amid the current global downturn.

 

Negotiations are currently ongoing to settle fourth-quarter BR contracts but resistance to the price target of $4,000/tonne CFR has been stiffening.

 

“It depends on the Q4 [fourth-quarter] BR contract settlement. If the Q4 BR contracts are settled at $4,000/tonne CFR Asia, then BD prices are likely to rise above $3,000/tonne CFR. If not, then BD prices will drop below $3,000/tonne to possibly around $2,800-2,900/tonne CFR,” a Japanese trader said.

 

“It is very volatile and uncertain at the moment, and given the current bearish market, the sentiment is that Q4 BR contracts are likely to settle below $4,000/tonne and that BD prices are likely to drop to $2,800-2,900/tonne,” a buyer said.

By: Helen Yan
+65 6780 4359

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