05 April 2013 20:56 [Source: ICIS news]
HOUSTON (ICIS)--The big news in the US butadiene (BD) market this week was a reported 5,000 tonne parcel of Asian product heading across the Pacific. This led some to ask, “What about Asian BD to Europe?”
The general consensus of the market on Friday could be summed up in one word: doubtful.
Shipping Asian BD certainly makes economic sense. Spot BD is priced at $1,625/tonne (€1,251/tonne) FD (free delivered) NWE (northwest Europe), while Asian BD has been trading as low as $1,350/tonne.
Depending on how much a broker paid for shipping, it could be a profitable transaction. But there are two problems with this scenario, market sources said.
One is demand. There is simply no demand for Asian BD in Europe. Especially since there are a number of plants expected to go down for planned maintenance in the next few months.
The other problem is supply is Asia. One of the reasons producers are shipping product to the US is because of a glut of Asian BD following the Lunar New Year. In short, producers ramped up ahead of the shutdown, came back from the holiday, and found the market softer than expected.
So they were left with surplus BD that has driven spot price in Asia down to about $1,400/tonne, maybe less.
But now BD supply is getting tight again in Asia, market sources said. And South Korea’s Yeochun NCC (YNCC) said Friday it will extend the turnaround of its 240,000 tonne/year BD plant by one week because of poor market conditions and for a safety audit.
The BD unit, at Yeosu in South Korea, will shut down from 8 May to 4 June for maintenance, a week longer than its original schedule from 8-28 May, the source said.
There are rumours that another parcel of Asian BD being put together for export to the US. But the market sentiment seems to be that it may be the last one.
($1 = €0.77)
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