22 November 2012 20:25 [Source: ICB]
Spot butanediol (BDO) prices in Asia are likely to fall further in the coming weeks on softening demand as the peak manufacturing season in the key China market ends, while sellers and buyers are saddled with high inventory of the material, market sources say.
Bulk BDO values in the region fell by about 7% from mid-October to $1,950-2,050/tonne (€1,541-1,620/tonne) CFR (cost and freight) CMP (China Main Port) on 13 November, according to ICIS.
DOMESTIC CHINA PRICES
In the key China market, domestic BDO prices have shed 5% to yuan (CNY) 14,800-15,200/tonne ($2,376-2,440/tonne) DEL over the same period, ICIS data show.
Most market participants cited dwindling demand and soft purchasing power of end-users.
At the recent Canton Fair in China, the turnover generated at $32.68bn from 15 October to 4 November was 9.3% lower compared with the previous fair on 15 April-5 May.
Canton Fair is China's largest semiannual trade fair, with the transactions concluded at the event widely regarded as a barometer of the country's foreign trade.
"The peak manufacturing season is closing now. We don't have enough orders, so we slowed down the procurement for feedstock BDO," a downstream polybutylene terephthalate (PBT) producer said.
The global economic slowdown and weak demand from downstream rigid polyurethane (PU), polybutylene terephthalate (PBT) and polytetramethylene ether glycol industries greatly weakened BDO consumption, sources said.
Consequently, regional BDO producers and suppliers with high inventory are being forced to lower their offers to generate sales, market sources said.
Most buyers and end-users are unwilling to build more stocks amid year-end destocking, which may weigh on the market further.
Supply, however, will get a boost by year-end, with the scheduled start-up of Sinopec Yizheng Chemical Fibre Co's 100,000 tonne/year plant in China, and may exert further downward pressure on BDO prices, market players said.
"We are not rushing to buy cargoes now because we are expecting prices to fall further in near term," a downstream user said.
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