Asia BD spot offers tumble; traders dump stocks amid slumping demand

Helen Yan

15-Apr-2020

SINGAPORE (ICIS)–Spot butadiene (BD) offers in northeast Asia slumped to the low- to mid-$300/tonne levels due to deteriorating demand amid an oversupply.

Traders with cargoes in hand are under pressure to offload stocks at sharply discounted prices given an influx of deep-sea material from Europe and the US.

Spot BD prices have shed about 55% since late January to an average of $425/tonne CFR (cost & freight) NE (northeast) Asia on 10 April, ICIS data showed.

“We hear buy-sell indications have dropped to around $300-350/tonne CFR NE Asia as there are deep-sea cargoes heading to Asia, while demand has slumped,” a trader said.

About 30,000 to 45,000 tonnes of BD from Europe and the US are expected to arrive in Asia in the second quarter following a demand collapse in the west amid lockdowns adopted contain the coronavirus pandemic.

Europe and the US are the worst hit by the pandemic that started in late 2019 in China.

BD is a key feedstock for synthetic rubber including styrene butadiene rubber (SBR) and polybutadiene rubber (PBR) which are used in the production of tyres for the automotive industry.

The coronavirus pandemic has battered the automotive industry, with major car makers including Toyota, Honda and Nissan, suspending operations and shuttering their facilities in Japan.

This prompted major downstream synthetic rubber (SR) makers in the northeast Asian country to cut output, thereby cutting their BD consumption, market sources said.

Consequently, Japan-origin BD are being sold by traders in the spot market at discounted prices. There are market talks that some Japanese producers might co-crack the crude C4 in a bid to reduce the swollen BD stocks.

Major tyre and automotive makers including Bridgestone, Goodyear, Michelin, BMW, Daimler, Fiat, Ford, Honda, General Motors, Nissan and Toyota, have cut their production and shuttered their factories across the globe.

“The auto industry is in the doldrums, demand for synthetic rubber has collapsed and will remain weak,” a rubber trader said, adding that prospects of a market rebound remains uncertain.

Focus article by Helen Yan

Visit the ICIS Coronavirus topic page for analysis of the impact on chemical markets and links to latest news.

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