Asia BD spot prices set to rise in April on cracker shutdowns

Focus article by Helen Yan

SINGAPORE (ICIS)–Asia butadiene (BD) spot prices look set to rise further this week following a strong bid posted by a trader to secure a sales tender for 2,000 tonnes for April loading, market sources said on Monday.

With intra-regional freight costs at around $50/tonne, the tender which was awarded by Taiwan’s Formosa Petrochemical Corp (FPCC) at $920/tonne FOB (free on board) Taiwan, will work out to $970/tonne CFR (cost and freight) northeast (NE) Asia, traders said.

“This means a jump of about $100/tonne this week, and offers will go up to $1,000/tonne CFR NE Asia and prices will surge, it has gone crazy again,” a trader said.

BD spot prices were assessed at $850-900/tonne CFR NE Asia on 27 March, up by $20-30/tonne from the previous week, ICIS data showed.

Although BD prices look to be on the uptrend, market players are also of the view that a continuous sharp BD price upward trajectory is not sustainable as Chinese demand is sluggish amid a slowing Chinese economy.

“Chinese demand is slow but buyers elsewhere may be able to support a higher price, but not so high as $1,000/tonne CFR NE Asia,” a major BD producer said.

“It is better for prices to rise moderately, we do not wish for prices to shoot up so high and so sharply, as this causes uncertainty,” the producer added.

BD supply is expected to tighten in April due to planned and unplanned outages.

Several crackers in Asia, including Maoming Petrochemical, Samsung Total, LG Chem, YNCC and Formosa Petrochemical Corp (FPCC), are scheduled to shut from April to July.

Thailand’s PTT Global Chemical (PTTGC) is expected to shut its 75,000 tonne/year butadiene (BD) unit in April due to technical issues at its naphtha cracker.

The company’s 515,000 tonne/year I-4 No 1 cracker in Map Ta Phut is expected to be shut for repairs.

The naphtha cracker, which is now running at reduced rates, could be offline for up to a month, sources said.

However, the key issue is fundamental demand as the downstream synthetic rubber producers are reluctant to support a BD price uptrend, if their margins are squeezed or eroded by fast-rising BD prices.

“We cannot support BD prices rising sharply week-on-week, if there are no margins,” a major synthetic rubber producer said.