European BD spot export prices rebound on Asian price uptick

LONDON (ICIS)–European butadiene (BD) spot export prices have rebounded on the back of higher prices in Asia but question marks over their sustainability remain, sources said on Friday.

“We have seen the bottom,” a source said.

Export deals concluded last week fetched $750-760/tonne on a FOB (free on board) ARA (Amsterdam, Rotterdam, Antwerp) basis for November and December lifting respectively.

This week there have been deals done some $120-130/tonne above these levels for mid-H2 December lifting, which means January arrivals.

None of the deals was fully confirmed by both buyer and seller.

“Prices are really picking up in Asia now,” a second source said.

“We were expecting this. We just didn’t know when it would happen. The question is now whether the price will rally.”

Some players were surprised at the extent of the week-on-week increase, and thought the Asian market was essentially unable to support higher numbers given the expectations regarding BD availability in that region, and especially China in the near-to-medium term.

Some players, however, questioned whether the price hikes had much basis in actual downstream demand levels, as opposed to trader-led speculative demand, given news about higher European export deals that later in the week bolstered Asian sellers’ attempts to increase offer prices further.

Those attempts came despite claims from end-users that such levels were unworkable.

“Traders buying is not an indication of real demand,” a third source said.

A couple of sources said that the deals highlighted more the unexpected absence of volume next month due to late-planned outages at BD units in Marl, Germany, and Antwerp, Belgium, rather than being a true indication of an upwardly-mobile market.

“From our side, we are not convinced regarding the [Asian] upswing,” a fourth source said.

“We would like to see much more convincing arguments,” it added.

This source added that while there would be clear preparation for the Chinese New Year, which starts on 16 February, “the potential overcapacity [impacts of prolonged derivative shutdowns and new BD capacity] makes us worried.”

From a domestic market perspective, spot numbers have not yet followed the same direction as the export market.

2,000 tonnes traded at an equivalent €630/tonne FD (free delivered) NWE (northwest Europe) this week, which is €20/tonne lower than a deal of an equivalent size last week.

The December contract reference price settled down by €100/tonne to €700/tonne FD NWE, firmer feedstock values and the Asian price pick-up having mitigated to some extent, the impacts of the sub-contract price spot prices.

Sellers said there was so far little significant year-end destocking seen nor was any dramatic slowdown expected over December, but there have been reports suggesting an early start to downstream destocking, particularly in southern Europe.

BD is a key chemical intermediate and monomer used in manufacturing of polymers such as synthetic rubbers or elastomers, including styrene-butadiene rubber (SBR), polybutadiene rubber (PBR) or nitrile rubber (NR), among others.

 

Picture source: VOISIN/PHANIE/REX/Shutterstock

Focus article  by Nel Weddle

Follow Nel Weddle on Twitter