FocusAsia BD price discussions deadlocked on wide buy-sell gap

01 September 2010 05:43  [Source: ICIS news]

By Helen Yan

SINGAPORE (ICIS)--Asia butadiene (BD) price discussions have been in a deadlock since early August with buyers and sellers far apart in price indications though industry sources said on Wednesday the situation is likely to be resolved soon.

With buyers seeking numbers at around or below $1,600/tonne CFR (cost and freight) northeast (NE) Asia against selling targets of $1,700/tonne CFR NE Asia and above, BD price discussions had been in a stalemate.

BD prices dropped to around $1,600/tonne CFR NE Asia in early August, down more than $100/tonne from July, according to data from ICIS.

Both buyers and sellers were not budging from their respective positions playing a waiting game to see who would blink first, traders said.

“It depends who gets desperate first to sell or buy and that will decide the price direction,” a trader said.

However, the situation was likely to be resolved soon as Chinese players need to settle before the start of the week-long National Day holidays in early October, market sources noted.

BD producers said that prices would face more upward pressure as supply tightens when cracker operators switch to liquefied petroleum gas (LGP) from naphtha to save costs but that yields less BD.

Major South Korean olefins producer, Yeochun Naphtha Cracking Centre (YNCC), has already indicated that it plans to switch to LPG.

Some BD producers in South Korea were also planning to export 4,000-5,000 tonnes of BD to the US Gulf in September. If this goes through, supply would tighten in Asia, traders said.

Furthermore, there would also be less BD available from China for export when new downstream acrylonitrile-butadiene-styrene (ABS) and styrene butadiene rubber (SBR) plants in China start up in September and absorb the surplus BD, traders said.

About 3,000 tonnes of BD would be available from China in September, compared with 6,000-8,000 tonnes that were exported in previous months.

Tianjin Dagu was expected to start up a new 200,000 tonne/year ABS plant in late September while Hangzhou Zhechen Rubber was slated to start up a 50,000 tonne/year SBR plant in the same month.

However, the downstream synthetic rubber producers, who are major consumers of BD, said that demand would remain slack due to upcoming synthetic rubber plant shutdowns in October.

Asia’s largest synthetic rubber producer, Korea Kumho Petrochemical Co (KKPC) would shut down its 480,000 tonne/year SBR, 222,000 tonne/year butadiene rubber (BR), 70,000 tonne/year nitrile rubber (NBR), 75,000 tonne/year styrene-butadiene-styrene (SBS) lines as well as its 250,000 tonne/year ABS plant for about 10-15 days of maintenance in early October.

“We have no spot appetite for BD as our synthetic rubber and ABS lines will be shut in October, while our upstream BD units will continue running during this period,” a company source at KKPC said.

KKPC also operates two BD units, a 150,000 tonne/year BD unit at Yeosu and an 85,000 tonne/year BD unit at Ulsan.

Thailand’s BST Elastomers (BSTE) was also planning to shut down its 75,000 tonne/year SBR and 55,000 tonne/year BR plants in Mab Ta Phut in October.

"It is still uncertain what will be the BD price direction, it depends on the whether the downstream synthetic rubber prices will continue to go up," a trader said.

For more information on BD, SBR and ABS, visit ICIS chemical intelligence
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By: Helen Yan
+65 6780 4359

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