Petrochemicals: Asian BD prices plummet

07 May 2012 00:00  [Source: ICB]

Cuts in downstream production are now pressuring prices which plunged in late April and look set to go down further

Poor global market for rubber Copyright: RexFeatures

Asian spot butadiene (BD) prices have plummeted by $450/tonne the week ended April 27 to $2,750-2,800/tonne (€2,074-2,112 /tonne) CFR (cost & freight) Northeast (NE) Asia as demand weakened because of shutdowns at downstream plants.

"BD prices are in free-fall now, and I will not be surprised if prices were to drop further, to around or below $2,000/tonne," one trader said.

A number of downstream synthetic rubber and plastics producers in China, South Korea and Taiwan have either cut production or completely shut down their plants in view of the poor global market conditions.

"We have negative margins and will continue to further reduce our operating rates until the market improves," a synthetic rubber producer in Northeast Asia said.

BD prices had climbed to as high as $4,000/tonne CFR NE Asia in mid February but have steadily declined since then.

AUTO SALES DECLINE
Tire makers in China, which are a key importer of synthetic rubber in Asia, are running their plants at reduced capacities of 50-60% amid declines in sales in the domestic and export markets, given slowing demand for cars amid the global economic weakness.

Auto sales in China, the world's largest car market, have shrunk 3.4% year on year in the first quarter of 2012, after registering a much subdued growth of 2.5% for the whole of 2011, official data showed.

Read John Richardson's ICIS Asian Chemical Connections blog

By: Helen Yan
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