01 July 2013 07:49 [Source: ICIS news]
By Helen Yan
SINGAPORE (ICIS)--Asia's butadiene (BD) prices are expected to fall further this month as additional capacities will come on stream while demand is still weak, industry sources said on Monday.
On 28 June, BD fell to $1,100-1,150/tonne (€847-886/tonne) CFR (cost and freight) northeast (NE) Asia, down by about $120/tonne from the previous week, according to ICIS data.
Three new BD units – one each in China, Indonesia and Taiwan – with a combined capacity of 320,000 tonnes/year are scheduled to start up in July that will flush the regional market with fresh supply, industry sources said.
“The additional BD supply will put a lot of downward pressure on BD prices in Asia, and for sure, BD prices will drop below $1,000/tonne CFR NE Asia as there is no derivative demand,” an industry source said.
In June alone, BD spot prices fell by about $270/tonne because of surplus stocks and continued weakness in demand for downstream industries.
Weak domestic demand is spurring Chinese BD producers to export their surplus BD, with some 3,000-5,000 tonnes spot cargoes available in July, industry sources said.
Some European BD sellers are also seeking spot customers in Asia, aggravating the supply-side price pressure in this region, industry sources said.
“We have offers of Europe-origin BD at around $1,100/tonne CFR NE Asia, but we are rejecting this offer as we are expecting BD prices to fall below $1,000/tonne CFR in Asia,” a downstream Asian SBR producer said.
BD is a major feedstock in the production of synthetic rubbers, including styrene butadiene rubber (SBR) and butadiene rubber (BR).
Several downstream synthetic rubber and acrylonitrile-butadiene-styrene (ABS) plants in Asia are either shut or running at reduced rates of about 50% or lower amid the sluggish rubber and automotive industry.
SBR and BR are raw materials in the production of tyres for the automotive industry.
A major South Korean synthetic rubber producer plans to further cut production at its 340,000 tonne/year BR plant this month. Operating rates will be reduced to about 50% from around 70% in June, a company source said.
($1 = €0.77)Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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