03 July 2012 07:41 [Source: ICIS news]
By Helen Yan
BD prices gained more than $300/tonne or 16% week on week to $2,300/tonne (€1,817/tonne) CFR (cost and freight) northeast (NE)
The price spike in Asia was in stark contrast with the sharp decline in US prices, thereby opening up a window for arbitrage trades that would further boost supply in the region, industry sources said. Most US BD producers have concluded their July BD contracts at 90 cents/lb ($1,980/tonne), down by 16% from June.
A Chinese synthetic rubber maker said it bought a 3,000-tonne BD cargo from the
More deep-sea cargoes from the
Asian BD prices surged last week because of an outage at Formosa Petrochemical Corp’s (FPCC) two crackers with a combined capacity of 2.23m tonnes/year in
The BD extraction units at the two crackers were also shut by a power outage at the Mailiao petrochemical complex, disrupting BD supply at a time when Chinese buying interest was gathering momentum, industry sources said.
FPCC restarted its 1.03m tonne/year No 2 cracker on 30 June, and is expected to resume production at its 1.2m tonne/year No 3 cracker on 10 July. FPCC’s 700,000 tonnes/year no 1 cracker was shut earlier on 19 June for a turnaround.
The Taiwanese producer’s three BD extraction units have a combined capacity of 450,000 tonnes/year.
BD supply is expected to improve soon as regional crackers are currently mostly running at full capacity because of cheap naphtha prices, industry sources said.
At noon on Tuesday, naphtha prices in
BD demand, on the other hand, is not expected to improve given weakness in downstream rubber market amid difficulty in increasing synthetic rubber prices, industry sources said.
Synthetic rubber producers are the major BD consumers. In
“The synthetic rubber producers will cut their operating rates if BD prices continue to rise as our margins will be eroded. We expect the BD spot prices to fall in late July or early August,” a downstream synthetic rubber producer said.
From February to mid-June this year, BD prices had steadily declined, allowing synthetic rubber makers to recover their margins, which turned negative when the feedstock prices hit $4,000/tonne CFR NE Asia.
Now the synthetic rubber producers are worried since BD spot prices have changed direction, gaining $400/tonne in the past two weeks.
“We hope that BD prices will stay stable at around $2,300/tonne CFR NE Asia because if there is no revival in fundamental demand, then high BD prices are meaningless,” a major BD producer said.
($1 = €0.79)
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