08 March 2010 16:27 [Source: ICIS news]
By Nigel Davis
The cost driven move to lighter cracker feeds in the
But the economics have not shifted sufficiently to encourage olefins makers to invest in additional C4s extraction. On-purpose butadiene production based on butane dehydrogenation does not appear to be an economic alternative.
There would be no case of the “tail wagging the dog”, delegates at the 5th ICIS World Olefins Conference in Amsterdam were told last week. Butadiene has been and will continue to be a by-product of olefins production. Cracker operators could allow one or two furnaces to run on heavier feed but that appears to be as far as most are prepared to go.
The world has changed in a relatively short period. Some of Europe’s crackers and units in
Yet the butadiene markets are demanding more. The move towards lower-rolling resistance tyres is driving demand for styrene butadiene rubber (SBR). Other uses in SB latex production, in engineering plastics, nitrile rubbers and elsewhere seem also to be on the rise.
The supply/demand situation is most acute in Asia and in
ICIS reported on Monday that tightness in the
Some in the European market argue for a shift away from quarterly to monthly pricing but customers are resistant. A more responsive pricing mechanism could be a driver for more extraction capacity.
The consensus view at the conference, however, was that butadiene supply would remain short and that European customers, which had enjoyed the lowest global prices, would eventually have to pay more competitive rates to keep that supply in
“The arbitrage window will have increasing influence on butadiene pricing within
European consumers of butadiene have every right to be concerned. The big tyre makers need to keep their synthetic rubber plants filled. Other consumers continue to hunt around for supplies but find prices moving upwards fast.
It looks as though demand will continue to put pressure on supply in
The dynamic markets in
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