FocusCost-push factors, tight supply to buoy up Asia butyl glycol

17 January 2013 07:50  [Source: ICIS news]

By Mahua Chakravarty

Butyl glycol is used in solvents.SINGAPORE (ICIS)--Spot butyl glycol prices in China and southeast Asia will be firmly supported by rising costs of raw material n-butanol, as well as by limited availability of deep-sea material in the first quarter, market sources said on Thursday.

On 16 January, butyl glycol prices were assessed at $1,590-1,620/tonne (€1,193-1,215/tonne) CFR (cost and freight) China and at $1,500-1,540/tonne CFR SE (southeast) Asia, up by $10-20/tonne from the previous week, according to ICIS.

Buying indications were inching up, with quotes at $1,580-1,590/tonne CFR for February shipments as suppliers insist on higher prices, although demand from the key Chinese market remains subdued, traders said.

“Prices will not jump higher, but are likely to creep up,” said a key southeast Asia-based buyer.

Selling indications for Japan and Malaysia-origin material were heard at about $1,650/tonne CFR China.

“The current prices are too low and raw material (n-butanol) prices are expensive,” said a northeast Asia-based producer.

Prices of feedstock n-butanol in Asia were assessed at $1,470-1,560/tonne CFR NE (northeast) Asia on 11 January, up by $20/tonne, tracking the uptrend in upstream propylene values in recent weeks, according to ICIS data.

Offers of US-origin cargoes will be limited in the first quarter of this year as key US-based producers like Lyondell, Dow Chemical and Eastman may be forced to reduce production due to higher raw material costs, said two producers. No further confirmation was available.

“[The] US is having problems with [feedstock] ethylene oxide (EO),” said a key producer.

“Hence, producers like Lyondell, Dow and Eastman don’t have excess butyl glycol for Asia in the first quarter,…[and] this is likely to tighten up supply,” he said.

BG demand from the downstream solvents sector in China remains muted because of continued weakness in the global economy, said producers and buyers.

Chinese buyers have also been staying at the sidelines as they have sufficient stocks and are slowing down purchases ahead of the Lunar New Year celebrations in February, they added.

The Chinese market will be closed on 9-15 February for the Lunar New Year festivities.

“We are still holding some stocks, prices are [also] stable in the domestic market…[and] there is no actual demand,” said a Shanghai-based importer and distributor.

($1 = €0.75)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Mahua Chakravarty
+65 6780 4359

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