LONDON (ICIS)--More than 400,000 tonnes/year of butadiene (BD) capacity is expected to come on stream in Europe by the end of 2015, a bank forecast on Tuesday.
The extra capacity should boost European synthetic rubber producers such as Poland-based Synthos by improving their competitive position against Asian counterparts, said Vienna-based Raiffeisen Centrobank (RCB).
Analysing the potential of BD expansion projects announced by LyondellBasell, BASF, Evonik, OMV, MOL and Versalis, RCB said that once in operation these investments should, in million tonnes/year, change Europe's BD production/capacity ratio from 2.0/2.4 to 2.2/2.8.
“More butadiene capacity means cheaper butadiene in Europe for Synthos and it is especially important as it is to launch new S-SBR [solution styrene butadiene rubber] capacity [of 100,000 tonnes/year in Krakow, Poland] in 2015,” said RCB analyst Dominik Niszcz.
“And cheaper butadiene in Europe versus the price in Asia will allow European [synthetic rubber] producers to buy cheaper raw material and sell rubber on Asian spot markets, with Asian producers often not integrated so the price of synthetic rubber in Asia is highly correlated with the butadiene price,” he added.
One drawback to Synthos from the expanded European BD capacity would be that the price production stemming from its own partially integrated production of BD would probably be weakened, Niszcz noted.
“The EU will be short in C4 but may be long in butadiene,” he said.