APIC ’12: Butadiene prices to remain high long term
18 May 2012 02:50 [Source: ICIS news]
KUALA LUMPUR (ICIS)--Global butadiene prices may drop slightly in the short term as crude oil values slide and plants return to operation, but record high prices will be the norm for the long term because of increasingly tight supply, a producer said on Friday.
“The ?xml:namespace>US trend to crack lighter feedstocks will continue because of cheap natural gas prices, and the consequence is reduced butadiene supply,” a US supplier said on the sidelines of the 34th annual Asia Petrochemical Industry Conference (APIC) 2012, held in Kuala Lumpur, Malaysia, on 17-18 May.
Shale-gas derived ethane has been a cheaper alternative for US olefins producers than naphtha cracking.
Ethane cracking yields very low percentages of mixed C4s, which butadiene is extracted from.
Outside the US, merchant naphtha is becoming less available because many of the big, state-owned refiners in Asia and the Middle East are integrating downstream into petrochemicals.
In China, the alternative option to naphtha as a petrochemical feedstock is coal.
The predominant use of butadiene is for tyres. An alternative product is natural rubber but it is difficult to secure sufficient supplies and production formulas at the tyre manufacturer would have to be altered, the producer said.
The US butadiene contract for the first four months of this year rose by nearly 60% compared with December 2011. However, prices fell in May on average by 5% as market conditions weakened on a global scale.
The US contract would fall again in June as international prices remain on a sharp downtrend, a buyer said, citing a 35% slump in the Asian market in the past few weeks.
“Prices are falling now because there were many outages in Europe, US and Asia in the first half of the year and these plants are back online,” the producer said.
“But fundamentally prices will remain much higher than levels seen just a couple years ago.”Author: Heather Doyle
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial
to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free
trial to ICIS Chemical Business.