FocusAsia BD may extend decline on influx of deep-sea cargoes

11 November 2013 05:30  [Source: ICIS news]

By Helen Yan

BD is the major raw material for SBR and BR, which are used in the production of tyres for the automotive industry.SINGAPORE (ICIS)--Spot butadiene (BD) prices in Asia look set to weaken further as deep-sea cargoes are heading into the region while the key China market has ample supply of the material, industry sources said on Monday.

A larger-than-normal volume of deep-sea BD supply – estimated at 30,000 tonnes coming from Europe and the US – will arrive in Asia from this month to early December, industry sources said.

Offers for December shipments are being quoted at $1,550/tonne (€1,163/tonne) CFR (cost and freight) northeast (NE) Asia, industry sources said.

On 8 November, BD  fell for the second week at an average of $1,625/tonne CFR (cost and freight) NE (northeast) Asia, shedding 5.5% from 25 October, according to ICIS data.

The decline, however, followed a near-doubling of BD prices in less than four months from $870/tonne on 19 July, the data showed.

“We have offers at $1,550/tonne CFR NE Asia but there is enough BD in China, ” a Chinese buyer said.

Availability of spot material in China improved with the recent restart of a 150,000 tonne/year BD plant owned by Fushun Petrochemical, creating a strong downward pressure on domestic prices, industry sources said.

Domestic BD prices in east China fell by more than  yuan (CNY) 1,500/tonne ($246/tonne) over a two-week period to an average of yuan (CNY) 10,800/tonne delivered (DEL) on 8 November, according to Chemease, an ICIS service in China.

Against this backdrop, regional traders with stocks-in-hand are being forced to cut their import offers substantially, industry sources said.

Until late October, BD prices had been spiralling upward because of limited supply as start-ups of new plants in China and Taiwan were delayed, at a time of robust demand, industry sources said.

A reversal of the recent BD price uptrend, however, was expected given the sluggish downstream synthetic rubber market and amid a general weakness in macroeconomic conditions, industry sources said.

Styrene butadiene rubber (SBR) and butadiene rubber (BR) producers are having difficulty hiking their product prices, with demand from tyre makers slowing down in the run-up to the end of the year, industry sources said.

BD is the major raw material for SBR and BR, which  are used in the production of tyres for the automotive industry.

“Tyre makers are trimming their inventories towards the end of the year. We expect demand for SBR and BR to weaken and prices to fall as tyre makers cut back their synthetic rubber  purchases,” a rubber distributor said.

($1 = €0.75 / $1 = CNY6.09)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections


By: Helen Yan
+65 6780 4359



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