Asia BD supply to stay limited amid firm demand

Author: Helen Yan

2020/08/21

SINGAPORE (ICIS)--Limited spot butadiene (BD) availability in Asia and firm demand will likely persist in the near term but recent price spikes could curb buying appetite.

Regional supply is limited due to ongoing and upcoming plant turnarounds, while inflows of deep-sea cargoes into Asia are dwindling amid improving demand.

Spot BD prices have surged by more than 50% since early July to an average of $575/tonne CFR (cost and freight) northeast (NE) Asia on 14 August, ICIS data showed.

Sellers were holding out for prices above $600/tonne CFR NE Asia.

Downstream synthetic rubber (SR) makers, the major consumers of BD, have expressed concerns that any further price surge for their feedstock will severely erode their margins and may even damage demand.

“I am worried about the fast and sharp increases in the BD spot price as it could mean trouble later,” a downstream SR maker said.

“The price uptrend will only be sustainable if the price increases are moderate and gradual,” a trader said.

“A sharp spike in prices week on week may damage demand and cause the price trend to reverse, especially with additional BD supply coming on stream in China later this year,” another trader said.

China is expected to see additional BD capacities of about 430,000 tonnes/year coming on stream in the second half of this year.

Meanwhile, regional supply is limited as a number of major facilities in Asia are either shut or undergoing maintenance.

In Taiwan, Formosa Petrochemical Corp’s (FPCC) 176,000 tonne/year BD unit at its No 3 cracker is currently shut for maintenance. The turnaround will last around 70 days until late October.

In South Korea, Lotte Chemical is likely to delay the restart of its 150,000 tonne/year BD unit in Daesan to November or early next year. The unit was shut in early March following a fire at the cracker.

In Malaysia, Pengerang Refining and Petrochemical (PRefChem) is also expected to only resume production at its 185,000 tonne/year BD unit in early 2021. The unit was shut following a fire at the company’s complex in Johor in mid-March this year.

In China, however, new supply will come from a 140,000 tonne/year BD unit in Liaoning which is expected to achieve on-spec product in the coming weeks.

The BD unit is part of the new 1.1m tonne/year naphtha/LPG cracker complex joint venture of LyondellBasell and Liaoning Bora Enterprise Group.

Focus article by Helen Yan

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