19 July 2012 06:31 [Source: ICIS news]
By Judith Wang
SINGAPORE (ICIS)--Asian butanediol (BDO) prices have rebounded by $50/tonne (€41/tonne) on the back of ongoing production cuts and rising feedstock prices, but market players said on Thursday that they were uncertain as to how long the values will stay firm.
Asian spot bulk BDO prices rose to $2,100-2,200/tonne CFR (cost & freight) ?xml:namespace>
Prices had had come down by around 24% since early April when they were at a high of $2,800-2,850/tonne. The decline was attributed to the falling crude futures, supply glut, and weak demand, according to market sources.
The average operating rate of
The subsequent decreased BDO supply, combined with the recent rising prices of feedstock butadiene (BD), boosted the market and forced many sellers and suppliers to firm their offers, the sources said.
Feedstock BD spot prices rose by $100/tonne to $2,400-2,500/tonne CFR NE Asia in the week ended 13 July.
“The BD prices are rising, so we cannot drop our BDO prices anymore. We are under much pressure now,” a producer said.
On the demand front, buyers who are sitting at low inventories started purchasing cargoes in anticipation of prices rising, although demand was relatively soft in the off-peak manufacturing summer season.
BDO buyers include downstream rigid polyurethane (PU), polybutylene terephthalate (PBT) and polytetramethylene ether glycol (PTMEG) industries, which have seen their own demand remaining soft amid global economic uncertainty.
“We have not traded BDO imports for a few months,” a trader said, adding: “If we build stocks and cannot find buyers we will face a big risk.”
If the current import price at $2,100/tonne was converted to CNY equivalent, it comes to above CNY16,000/tonne - much higher than prevailing domestic prices - the trader added.
The DEL China prices was also up by CNY200/tonne ($31/tonne) to CNY14,400-15,4000/tonne in the week ended on 17 July, according to ICIS.
The trading activity on the import front has therefore been subdued in the past few weeks because of a wide gap between cheap domestic material and higher import costs, sources said.
“The import cargoes are too expensive for us, so we reduced our procurement this year because of the weak exports [of downstream products],” an end-user said.
Most market players are unsure if the price rise will sustain, given the weak demand amid
Earlier this week the International Monetary Fund (IMF) cut its forecast for global economic growth and said that emerging market nations, long a global bright spot, are now being dragged down by
The IMF cut its 2012 growth forecast for
Later on 18 July IMF warned that the European sovereign debt and financial crisis has reached “a new and critical stage” and that the euro currency union is at risk of collapse.
The IMF said despite major policy actions, financial markets in parts of the European region remain under acute stress, raising questions about the viability of the monetary union itself.
Any exacerbations in already worrying financial crisis in Europe will exert downward pressure on
($1 = €0.82 / $1 = CNY6.37)
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