China BG import talks stagnant; SE Asia market buoyant on tight supply

Author: Bonnie Yin

2021/11/18

SINGAPORE (ICIS)--Butyl glycol (BG) importers in China have taken a wait-and-see stance on the market amid sluggish downstream demand, but in southeast Asia, buying sentiment for bulk cargoes remained strong amid limited supply which may persist until year end.

Import deals and discussions for November- or December-loading cargoes on a cost-and-freight (CFR) China basis were few during the week.

In the week ended 17 November, spot BG prices were stable from the previous week at $2,400-2,510/tonne CFR China, according to ICIS data.

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Slower downstream consumption and ample inventories have kept distributors off the market, preferring to monitor developments for now.

Some buyers were bearish in the near term, expecting market liquidity to remain thin.

“We got fewer enquiries from downstream users this week, but our inventories had been increasing. It’s quite risky to take more cargoes,” a distributor said.

On the supply side, most Asian producers kept their indications stable despite weak buying sentiment in China.

Producers currently enjoy better margins and have the option to offload cargoes to southeast Asia, where spot offers were limited and downstream demand was gradually picking up.

“We maintained our offers for import BG in China, as our supply was limited and SE Asian importers kept asking more with same price level, thus we don’t think we need to lower our prices following Chinese domestic market,” said an Asian producer.

In the domestic ex-tank BG market, prices in both east and south China on 17 November fell to yuan (CNY) 19,500/tonne, down by CNY700-1,100/tonne ($110-172/tonne) week on week.

Although China’s sole BG producer Jiangsu Dynamic Chemical shut its plant on 15 November, causing tightened supply, most end-users have either retreated to the sidelines or only buying cargoes on a need-to basis.

Distributors, meanwhile, have maintained elevated offers due to cost pressures.

Recovering port inventories and softened domestic prices of feedstock ethylene oxide (EO) and n-butanol also weighed on the market.

In southeast Asia, import BG discussions in the week ended 17 November were stable to firm at $2,400-2,550/tonne CFR, according to ICIS data.

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Inventories at ports in some countries in the region were limited as distributors were still trying to replenish depleted stocks following recent lifting of COVID-related lockdowns.

Downstream demand saw significant improvement, boosting appetite among distributors to import more cargoes.

Deep-sea supply into the region remains limited, with some plants in the US either running at lower rates or shut due to technical issues.

Focus article by Bonnie Yin

($1 = CNY6.38)

Thumbnail photo: At Ningbo Zhoushan Port on 18 October 2021 (Source: Sipa Asia/Shutterstock)