02 November 2012 06:08 [Source: ICIS news]
By Helen Yan
SINGAPORE (ICIS)--Spot butadiene (BD) prices in Asia may continue falling in the coming weeks, as sellers are being forced to offload surplus stocks amid a slump in downstream automotive industry, industry players said on Friday.
BD prices have shed more than $200/tonne (€154/tonne) since late September, weighed down by oversupply and a persistent weakness in demand.
On 26 October, BD was assessed at $1,750-1,800/tonne CFR (cost and freight) northeast (NE) Asia, down by $60-90/tonne from the previous week, according to ICIS data.
“The BD producers have inventory pressure and demand is weak. Buyers have been asking to delay the delivery of their cargoes to late December and bids are falling below $1,700/tonne,” a trader said.
Traders with stocks in-hand are under pressure to sell the material at discounted prices to attract buyers.
Price pressures will be heightened as some 20,000 tonnes of deep-sea BD cargoes from Europe, the Middle East and Brazil are scheduled to arrive in Asia in the next two months, industry sources said.
“There is still room for the BD prices to fall further as there are too many cargoes chasing too few customers,” an industry source said.
Demand has remained weak as a number of downstream synthetic rubber producers in China and South Korea have either shut down plants for maintenance or cut production, in response to the slumping global automotive industry.
BD is a raw material for synthetic rubbers, which go into the production of tyres for the automotive industry.
Synthetic rubbers include styrene butadiene rubber (SBR) and butadiene rubber (BR).
Korea Kumho Petrochemical Co (KKPC), Asia’s largest synthetic rubber producer, intends to continue running its 330,000 tonne/year BR plant in Yeosu at a reduced capacity of 80% up to yearend, a company source said.
Taiwan’s TSRC Corp, meanwhile, is looking at cutting production at its 100,000 tonne/year SBR plant in Kaohsiung to 80% in November if market conditions do not improve.
Several Chinese BR producers, including Sinopec Shanghai Gaoqiao, Dushanzhi Petrochemical, Xinjiang Land Fine Petrochemical and Qilu Petrochemical have shut down their plants because of poor market conditions.
Slowing sales and production cuts in the automotive industry in China and India have been weighing on demand for synthetic rubber in Asia, which is a major production centre for global tyre makers.
Demand for tyres is expected to weaken further with a number of major auto-makers announcing production cuts amid the slowdown of the global economy.
German truck manufacturer MAN had announced that it is halting assembling lines at two plants in Munich and Salzgitter for four weeks from 29 October because of falling demand in Europe.
US’ Ford Motor and General Motors and France’s Peugeot Citroen have announced plans to shut their plants in Belgium, Britain, Germany and France in the next few years from 2014.
($1 = €0.77)
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