19 April 2011 06:32 [Source: ICIS news]
SINGAPORE (ICIS)--Asia butadiene (BD) prices may be nearing their peak as downstream synthetic rubber makers have cut their operating rates in a bid to stem the relentless feedstock price surge, industry sources said on Tuesday.
Asia spot BD prices surged by more than $200/tonne (€140/tonne) week on week to $3,080-3,120/tonne CFR (cost & freight) northeast (NE) Asia on 15 April, ICIS data showed.
A spate of production issues, cracker outages and plant turnarounds in Asia, Europe and the US has caused BD prices to rise by more than $1,000/tonne from the $2,040-2,100/tonne CFR NE Asia level seen in early January, according to ICIS data.
Jam Petrochemical has a BD capacity of 115,000 tonnes/year and exports its output to Asia.
Meanwhile, Iran’s Amir Kabir Petrochemical will on 22 April shut down its 50,000 tonne/year BD unit in Bandar Imam Khomeini for a 45-day turnaround, a company source said.
However, Amir Kabir’s planned maintenance is unlikely to have a major impact on BD prices, traders said.
“Amir Kabir’s BD capacity is smaller and it is a planned shutdown, so there will not be a big impact on BD prices, unlike Jam Petrochemical – which has a bigger BD capacity – as its shutdown was unexpected,” said a trader.
Nonetheless, Asia’s largest synthetic rubber producer Kumho Petrochemical (KKPC) will shut down its 70,000 tonne/year styrene-butadiene-styrene (SBS) plant in May because of the relentless uptrend in BD prices, a company source said.
“The raw material BD costs are too high and our margins have been eroded,” the source said.
Other synthetic rubber producers in Asia told ICIS that they are also mulling reductions in their operating rates and added that the uncertain outlook for synthetic rubber prices is another factor for their resistance to a further BD price hike.
“Synthetic rubber prices have been fluctuating and may fall, while feedstock BD prices have been rising. That makes it difficult for us to continue running our operations at full rate,” said a southeast Asian producer.
“We will consider cutting the operating rate at our SBR plant if BD prices continue to rise,” the producer added.
($1 = €0.70)
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