13 October 2008 05:41 [Source: ICIS news]
By Helen Yan
SINGAPORE (ICIS news)--Asia butadiene (BD) prices may further weaken to $2,000/tonne by end-December after plummeting about 17% last week amid shrinking demand and rising inventories as the global credit crisis deepens, traders and buyers said.
BD prices plunged by $500/tonne to $2,350-2,400/tonne (cost and freight) northeast (NE) Asia week-on-week, tracking falls in crude and naphtha values, which slipped to around $80/bbl and below $600/t CFR Japan, respectively.
The cheaper Chinese BD and the slump in the derivative Chinese domestic synthetic rubber market also exerted pressure on BD prices, defeating efforts by producers to hold them close to $3,000/tonne CFR northeast (NE) ?xml:namespace>
Several major cracker operators, including Formosa Petrochemical Corp in
“BD is likely to fall to $2,000/tonne by the end of this year. But who knows where the bottom is, given the global financial turmoil,” a trader said.
This had freed up surplus BD into the export market, with Chinese BD producers dropping prices below $2,400/tonne CFR NE Asia in a bid to attract buyers.
But with crude falling more than 45% last week from its peak at $147/bbl in July, and natural rubber values plunging by $1,000/tonne since early September to dip below $2,000/tonne, synthetic rubber prices themselves are under downward pressure and synthetic rubber producers have continued to press for lower BD numbers.
Natural rubber is a substitute for synthetic rubber and tyre producers had switched to the cheaper natural rubber, further dampening demand for synthetic rubber and inevitably BD.
“BD prices can drop to $1,500-1,700/tonne CFR NE Asia, back to the same level as in December last year when crude was $80-90/bbl,” a Chinese synthetic rubber producer said.
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