27 December 2012 03:16 [Source: ICIS news]
By Helen Yan
SINGAPORE (ICIS)--Asia butadiene (BD) prices will likely rise further in January and remain strong in the first quarter of 2013 as buying interest is expected to pick up ahead of the Lunar New Year and remain firm, industry sources said.
“Lunar New Year falls on 10 February next year and the month of February will be a short trading month in China, so traders and end-users will try to secure their cargoes in January ahead of the holidays, which may push the BD prices above $1,700/tonne (€1,292/tonne) next month,” an industry source said.
In the week ended 21 December, BD spot prices were at $1,570-1,610/tonne CFR (cost and freight) northeast (NE) Asia, up by $120/tonne since 30 November, according to ICIS.
The key China market is shut for a week on 9-15 February for the Lunar New Year holidays while markets in Hong Kong and other Asian countries including Taiwan, South Korea, Malaysia and Singapore will close for at least two days for the festive celebrations.
Trading activities usually wind down a week or so before the Lunar New Year holidays as market players exit the market and leave for their hometowns to celebrate the festival.
Prior to the recent price rebound in late November, BD spot prices have been declining since September, with prices averaging $2,010/tonne CFR NE Asia on 28 September, ICIS data showed.
Meanwhile, traders said that buying interest from the end-users has emerged as they have received enquiries and bids above $1,600/tonne CFR NE Asia for January shipments.
Buying interest and support from the downstream synthetic rubber makers is expected to strengthen after the Lunar New Year in February as higher BD prices will help to boost the downstream synthetic rubber prices, industry sources said.
“It will be good for the downstream synthetic rubber makers if the BD prices rise further as it will help to lift the synthetic rubber prices as well,” a Chinese trader said.
BD is a major feedstock for the downstream styrene butadiene rubber (SBR) makers – the major consumers of BD.
BD makes up about 70% of SBR composition and production costs.
Non-oil grade 1502 SBR prices averaged $2,250/tonne CIF (cost, freight and insurance) China in the week ended 19 December 2012, down by $225/tonne or about 10% since late September, according to ICIS.
Non-oil grade 1502 SBR prices averaged $2,475/tonne CIF China on 26 September 2012, ICIS data showed.
“There is still room for the BD price to go up as it is a bit low at the current moment, which makes it difficult for the SBR prices to go up,” an industry source said.
($1 = €0.76)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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