BD price recovery threatened by new east Asia capacities: Bank

07 November 2013 11:09  [Source: ICIS news]

LONDON (ICIS)--The sustainability of the ongoing butadiene (BD) price increase must be watched closely given the expected launch of delayed BD units in east Asia within the next two months, an investment bank said on Thursday.

“With the Asian BD price hike being the key source of upward pressure on rubber prices, we believe that the sustainability of the BD price increase will be the main factor to watch, given the expected launch of delayed BD units in China (150,000 tonnes/year), Indonesia (100,000 tonnes/year) and Taiwan (100,000 tonnes/year) by the end of the year,” said Piotr Drozd, a chemical industry analyst at WOOD & Company.

The recovery in styrene butadiene rubber (SBR) prices on the back of the BD price rebound was positive for Poland’s major SBR producer Synthos, but “remains muted as weak downstream tyre demand does not allow for bolder moves on the pricing front”, Drozd added.

Following the November price hike, SBR prices remain down 27% year on year, while monomer margins – the spread between SBR prices and the BD/styrene input costs – are down 25% year on year, at levels last seen in early 2010, Prague-based WOOD & Company said.

European November SBR monthly contract prices increased month on month by €30-50/tonne ($41-68/tonne).

The price increase was driven primarily by increased European BD feedstock prices, which were up by €75/tonne month on month to €900/tonne, noted WOOD & Company.

The increase in the November BD contracts was broadly anticipated by the market with demand from Asia, which was hit by supply constraints, and European maintenance shutdowns pushing spot prices up to €925-1,000/tonne, the bank added.

Against the 6% month on month decline in European styrene prices, benchmark SBR margins increased to €444/tonne for November from €415/tonne in October, it added.

($1 = €0.74)

By: Will Conroy
+44 20 8652 3214

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