Price and market trends: Asia BD uptrend to continue on strong buying interest

25 January 2013 10:44  [Source: ICB]

Suppliers project spot prices to hit $2,000/tonne CFR NE Asia by Q2, gauging from current strong upward momentum

Asia's butadiene (BD) prices look set to rise further, with current offers for February cargoes at above $1,800/tonne (€1,350/tonne), on expectations that demand in the key China market will pick up after the Lunar New Year holiday, industry sources say.

 
Spot offers stood at $1,850-1,870/tonne CFR (cost and freight) in northeast (NE) Asia, taking into account inter-regional freight costs of $150-170/tonne from southeast Asia, according to market sources.

On 11 January, BD prices were assessed at $1,720-1,760/tonne CFR NE Asia, gaining an average of $150/tonne in the first two weeks of the year. Two recent sales tenders generated firm bids, but were awarded on a floating-price basis as the sellers expect spot BD values to continue rising, market sources said.

A 2,000-tonne cargo for early February shipment sales tender by Thailand's Bangkok Synthetics received bids at above $1,700/tonne FOB (free on board) Map Ta Phut, while Malaysian Titan Petrochemicals' sales tender for a 1,500-2,000-tonne BD cargo fetched bids in the range of $1,600-1,630/tonne FOB Pasir Gudang on 11 January.

Traders have been snapping up available cargoes, anticipating China to require volumes for second-half February, when its market re-opens after the Lunar New Year celebration on 9-15 February.

HOLIDAY SLOWDOWN
Trades in China - a major BD importer in Asia - usually wind down at least a week prior to the festivity, which is also observed in most parts of the region.

A possible tightening of supply, with less inflow of deep-sea cargoes into Asia following an outage at a major cracker in France, also compounds the upward pressure on BD prices in this region, market sources said.

Some BD parcels heading to the region from Europe - estimated at more than 30,000 tonnes in January and February - may be affected, they said.

The 775,000 tonne/year ­Napthachimie cracker at Lavera in France was shut on 22 December after a compressor caught fire, prompting a force majeure declaration on BD production. Its 120,000 tonne/year BD unit is shut and is not expected to resume production until at least mid-February, industry sources said.

Some Asia BD suppliers are projecting spot prices to hit $2,000/tonne CFR NE Asia by the second quarter, gauging from the strong upward momentum seen in the market since the start of the year.

Further BD prices gains, however, will be detrimental to downstream synthetic rubber makers.

BD is a raw material used in the manufacture of synthetic rubbers that go into tyres for the automotive industry.

"If BD prices hit $2,000/tonne CFR NE Asia, the downstream rubber makers will shut down their plants as they will have no margins," a Chinese synthetic rubber producer said.

Recovery in spot synthetic rubbers demand may not be forthcoming as most tyre makers currently have enough feedstocks to continue their production through February, industry sources said.


By: Helen Yan
+65 6780 4359



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