06 June 2013 04:38 [Source: ICIS news]
By Helen Yan
SINGAPORE (ICIS)--Asia’s spot butadiene (BD) prices may face strong downward pressure this month, with Chinese producers saddled with surplus stocks competing for buyers in the regional market, industry sources said on Thursday.
On 31 May, BD was assessed at $1,410-1,440/tonne (€1,072-1,094/tonne) CFR (cost and freight) northeast (NE) Asia, down by $40-60/tonne from the previous week, according to ICIS data.
“Chinese BD producers including Sinopec, may have several thousand tonnes to export in June as the domestic market is oversupplied due to the poor downstream synthetic rubber market in China,” an industry source said.
Sinopec is one of China’s major petrochemical producers.
China has less use for BD as a number of domestic downstream styrene butadiene rubber (SBR) and butadiene rubber (BR) makers have curbed production because of poor demand, industry sources said.
Among these are Tianjin Lugang Petroleum Rubber, Sinopec Maoming, Hangzhou Zhechen Rubber, TSRC-UBE (Nantong) Chemical Industrial and Fuxiang Chemical. Some of them have shut their synthetic rubber facilities or are running their plants at barely half of capacity.
“China’s Sinopec is under pressure to export their surplus BD stocks, and it looks possible that BD prices may fall to below $1,400/tonne,” a Chinese trader said.
In South Korea, BR producers are also operating their plants at reduced rates and have plans to further cut output this month because of poor market conditions. These include Korea Kumho Petrochemical Co (KKPC) and LG Chem.
Demand for synthetic rubber is slumping amid the sluggish global automotive industry, industry sources said.
SBR and BR are raw materials used in the production of tyres for the automotive industry.
With Europe deep in recession, the US economy in a fragile state and the Chinese economy slowing down, overall sales in the automotive industry has been flagging, leading to lower consumption of SBR and BR.
Spot prices of downstream non-oil grade 1502 SBR and BR have plunged by $450/tonne since early March to around $2,000-2,050/tonne CIF (cost, insurance and freight) China, and $2,100-2,200/tonne CFR Asia, respectively, in early June, according to ICIS data.
Synthetic rubber producers are having difficulty raising prices, with cost of feedstock BD continuing to head south at an unhealthy speed, industry sources said.
“I do not wish to see BD dropping too much, even though I am a buyer. It will be good if BD can stay at around plus or minus $1,450/tonne CFR NE Asia, ” a south Korean synthetic rubber producer said.
($1 = €0.76)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
Asian Chemical Connections