Price and market trends: Asian butadiene may extend gains

27 September 2013 10:20  [Source: ICB]

Spot butadiene (BD) prices in Asia are set to rise further in the near term as delays in start-up of new plants led to a tighter-than-expected supply in the market, industry sources said on 
19 September.

Some 350,000 tonnes/year in additional BD capacity that was supposed to come on stream in July-August did not materialise, partly because of continued weakness in the downstream synthetic rubber market, industry sources said.

The BD supply crunch 
has spurred traders to hike offers to more than $1,450/tonne (€1,073/tonne) CFR (cost and freight) NE (northeast) Asia for October shipments.

“We have received several enquiries from customers in China, Taiwan and Indonesia, and are targeting $1,500/tonne CFR NE Asia for October shipments,” a Japanese trader said.

On 13 September, BD spot prices averaged $1,325/tonne CFR NE Asia, racking up gains of about 52% from 19 July, according to ICIS data.

Sichuan Petrochemical’s 150,000 tonne/year unit in China, CPC’s 100,000 tonne/year unit in Taiwan and Chandra Asri’s 100,000/tonne facility in Indonesia failed to commence operations as originally planned, industry sources said.

Spot cargoes available in the market are scarce, with a number of Asian BD producers out of October stocks at a time when deep-sea supply from Europe is dwindling, according to industry sources.

“We have sold out our October cargoes and have no spot available,” a major South Korean producer said.

Downstream synthetic rubber producers, on the other hand, are resisting further spikes in BD prices that are eroding their margins amid continued weakness in demand.

“We have no margins as the BD price is moving up too fast while the synthetic rubber price is lagging behind and there is a lot of resistance to price increases for synthetic rubber,” a northeast Asian synthetic rubber producer said.

Spot prices of butadiene rubber (BR), a type of synthetic rubber, averaged $1,800/tonne CFR NE Asia on 12 September. BR prices increased by 12% from 25 July – barely half the 52% jump in BD prices in roughly the same period, according to ICIS data.

Synthetic rubbers are used in the manufacture of tyres for the automotive industry.

By: Helen Yan
+65 6780 4359

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