FocusSoutheast Asia MA may extend falls on declining butane prices

10 February 2014 07:30  [Source: ICIS news]

By Matthew Chong

Southeast Asia MA may extend falls on declining butane pricesSINGAPORE (ICIS)--Spot maleic anhydride (MA) prices in southeast Asia may be dragged down by falling prices of feedstock butane in a more active market after the Lunar New Year holidays, industry sources said on Monday.

On 7 February, MA was assessed at an average of $1,810/tonne CFR (cost and freight) SE (southeast) Asia, down by $5/tonne from the previous week, according to ICIS data.

MA prices had shot up 7% to near nine-month high in early December 2013 on the back of surging butane costs, before stabilising at a range of $1,800-1,840/tonne CFR SE Asia over the past six weeks, ICIS data showed.

Market activities were muted in the past two weeks amid the Lunar New Year, which is celebrated in most parts of southeast and northeast Asia. China was on holiday from 31 January to 6 February.

Support from butane prices, however, has started to wane, prompting MA buyers to hold back on purchases, industry players said.

Early this month, February butane contract prices were announced at $970/tonne FOB (free on board) Ras Tanura, down by $50/tonne from January prices and 21% lower compared with December prices, market sources said.

“I have expected this month’s [February] butane [contract] prices to fall by more than $50 [/tonne FOB Ras Tanura], said a South Korean MA producer.

For March, butane contract prices are expected to soften further, market source said, as spot prices of feedstock have been hovering at around $890/tonne FOB Ras Tanura since end-January, according to ICIS C1 Energy.

Spot butane prices may continue to slide down with the approach of the summer months, when demand for heating purposes tapers off, market sources said.

Demand for butane spikes during winter.

“I don’t rule out the possibility of [MA] prices going back down to pre-upsurge levels at $1,700 [/tonne CFR SE Asia],” said a major Taiwanese producer in Mandarin.

Moreover, tight MA supply in Taiwan and South Korea is expected to ease soon as most facilities in Asia that are undergoing turnaround are due to resume production this month, market sources said.

High butane costs prompted most MA producers in these countries to bring forward or extend the duration of planned maintenance at their facilities.

Taiwanese and South Korean MA manufacturers use butane as feedstock, whereas those in China, Indonesia and Japan mostly rely on benzene for MA production.

Benzene spot and contract prices have been relatively stable in the past few months at around $1,350 FOB Korea, according to ICIS data.

While most industry players are hoping that downstream demand would improve in the second quarter, others were less optimistic as the direction of the global economy this year is still unclear.

“[MA] demand should remain relatively stable throughout the year as the peak and lull [demand] seasons have not been as prominent as in the past,” said a Singapore-based supplier.

Demand from downstream construction sector traditionally peaks mid-year, as activities pick up during the summer months.

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


By: Matthew Chong
+65 6780 4327



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