Asia BD producers eye US arbitrage window

18 February 2010 03:28  [Source: ICIS news]

SINGAPORE (ICIS news)--Asia butadiene (BD) producers plan to tap the arbitrage window to the United States as spot prices there soared to 90 cents/lb ($1,980/tonne) (€1,445/tonne), and are set to rise in March as demand outstrips supply, industry sources said on Thursday.

“We are now talking to US buyers and are looking to export 5,000 tonnes of butadiene in early March,” a major Korean BD producer said.

“We are closely watching the US market and expect prices there to go higher to 95 cents and maybe even 100 cents soon as supply is very tight,” he added.

Plant outages and maintenance shutdowns have crimped supply in the US, prompting two US BD producers to put their product on sales allocation and fuelling talk of another round of hefty price hikes in March.

“If the US prices continue to go up, this will open the arbitrage window to the US for Asian BD producers, which means tighter supply/demand balance in Asia,” a Japanese trader said.

In view of the arbitrage opportunities to the US, earlier expectations that BD prices in Asia may tumble to $1,600/tonne CFR NE Asia when new capacities coming on-stream in China and India in March are now being reviewed.

A new 200,000 tonne/year BD extraction unit was expected to start commercial production in Tianjin, China, in March while an expanded 100,000 tonne/year BD unit was also expected to start up by end February or early March in Haldia, India.

BD spot prices fell to $1,750-1,800/tonne CFR (cost and freight) northeast (NE) Asia last week after rising close to $1,900/tonne CFR NE Asia in mid-January, according to global markets intelligence service, ICIS pricing.

“BD prices will mostly likely be sustainable around $1,700/tonne CFR NE Asia,” a Japanese trader said.

($1 = €0.73)

For more on butadiene visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Helen Yan
+65 6780 4359

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