FocusAsia BD to extend falls on reduced synthetic rubber, ABS output

07 October 2011 06:24  [Source: ICIS news]

Butadiene is a raw material for the manufacture of synthetic rubbers, which go into the production of tyres for the automotive industry.By Helen Yan

SINGAPORE (ICIS)--Spot butadiene (BD) prices in Asia look set to fall further this month as suppliers are forced to offload surplus material given reduced regional production at major downstream synthetic rubber and acrylonitrile-butadiene-styrene (ABS) sectors, industry sources said on Friday.

BD shed about $700/tonne (€518/tonne) last month, ending September at $2,700-2,800/tonne CFR (cost and freight) northeast (NE) Asia, according to ICIS data.

“We expect the BD price to fall to around the $2,000/tonne CFR NE Asia level by the end of October and may even drop below this level in early November, given the current bearish market sentiment,” a trader said.

About 10,000 to 15,000 tonnes of BD from Europe and the US are scheduled to arrive in Asia in October and November, competing with Asian supply, which is struggling to find buyers in the current weak market.

“If a buyer is willing to pay $2,300-2,400/tonne CFR NE Asia this week, I will sell at this price as there is too much supply in the market now,” another trader said.

Concerns over the ongoing European debt crisis and a faltering US economy have prompted production cutbacks of synthetic rubbers and ABS resins in Asia. China, Japan, South Korea and Taiwan are export-oriented economies that count Europe and the US as their major markets.

“Spot appetite [for BD] is very weak as the downstream synthetic rubber and ABS makers are operating at significantly reduced rates, given concerns over a global recession,” a trader said.

Synthetic rubbers are used in the production of tyres for the automotive industry, while ABS is used in a wide range of consumer products including office equipment, household appliances and toys.

South Korea’s Kumho Petrochemical, the biggest synthetic rubber producer in Asia, is currently conducting maintenance at all its plants in Ulsan and Yeosu.

The company’s 481,000 tonne/year styrene butadiene rubber (SBR) plant and 50,000 nitrile rubber (NBR) tonne/year in Ulsan are off line from 6-20 October. In Yeosu, Kumho’s 342,000 tonne/year butadiene rubber (BR) plant is shut from 4-24 October.

Meanwhile, major regional ABS producers, including Chi Mei and LG Yongxin, are operating their plants at just about half their capacity, industry sources said.

“The market is very quiet this week with China shut for the National Day holidays and buyers are just waiting for prices to fall further before they come back to the market to buy,” a Korean trader said.

The Chinese market is closed for a week-long celeberation of its National Day on 1-7 October.

($1 = €0.74)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Helen Yan
+65 6780 4359

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