FocusAsia BD prices soar on buying before Lunar New Year

19 December 2011 03:30  [Source: ICIS news]

By Helen Yan

BD is a raw material for synthetic rubbers, which are used in the production of automobile tyresSINGAPORE (ICIS)--Butadiene (BD) prices are set to rise further in Asia as traders and end-users scramble to secure spot cargoes before the Lunar New Year, industry sources said on Monday.

Lunar New Year falls on January 23 next year with China closed on January 22-28 for the festivities.

January will be a short trading month as several countries in Asia including Hong Kong, South Korea, Taiwan, Singapore, Malaysia and Vietnam also celebrate the Lunar New Year.

BD spot prices have rebounded sharply since early November as limited availability and a sudden surge in buying interest have pushed prices up sharply, industry sources said.

Spot offers for fresh January shipments have increased to $2,900-3,000/tonne (€2,233-2,310/tonne) CFR (cost and freight) northeast (NE) Asia, Korean producers said.

In the week ended 16 December 2011, BD prices were at $2,500-2,550/tonne CFR NE Asia, according to ICIS.

BD prices peaked at $4,250-4,300/tonne in the week ended 15 July 2011 but fell steadily since then to bottom out at $1,550-1,600/tonne CFR NE Asia in the week ended 11 November, according to ICIS.

“January is a very hot month and our offers are above $2,850/tonne FOB (free on board) Korea as there is a lot of interest from buyers to procure material before the Lunar New Year holidays,” a Korean supplier said.

Intra-regional freight costs in northeast Asia are between $60-80/tonne, which means offers on a CFR NE Asia basis are now more than $2,900/tonne, industry sources said.

However, the sharp BD price rebound may soon face resistance from the downstream synthetic rubber producers who said they may have to cut back on production output if the BD price continues to rise further.

“Our margins will be wiped out if we have to pay higher than $2,600/tonne CFR NE Asia for BD. We are finding it difficult to raise our synthetic rubber prices, given the poor market conditions with eurozone debt crisis and recession fears,” a synthetic rubber producer said.

($1 = €0.77)

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By: Helen Yan
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