Price and market trends: Asia butadiene prices could fall further on excess supply

12 July 2013 17:37  [Source: ICB]

Three new butadiene units are set to start up in July, bringing supply to a weak market

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 1 July.

 Extra supplies of BD, used in tyres, will put pressure on prices

Copyright: Rex Features

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% in July from around 70% in June, a company source said.

By: Helen Yan
+65 6780 4359

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly