NE Asia NBA buy-sell gap may narrow if domestic prices rise

Trixie Yap

16-Jul-2014

Focus story by Trixie Yap

NBA is used in coatings, paints and varnishesSINGAPORE (ICIS)–The gap between buyers and sellers of n-butanol (NBA) in northeast Asia may narrow in the short-term if yuan-denominated prices continue to extend gains, market sources said on Wednesday.

Buying indications as of 16 July remained relatively stable at $1,210/tonne CFR (cost and freight) China/NE (northeast) Asia for non-dutiable cargoes and at $1,170/tonne CFR China/NE Asia for dutiable cargoes.

The stable buying indications can be attributed to weak downstream demand from sectors such as butyl acetate (butac) and butyl acrylate (butyl-A), amid the seasonal lull, especially in the northeast Asia region, buyers said.

Spot prices of NBA were assessed at $1,170-1,260/tonne on a CFR China/NE Asia basis in the week ended 11 July, ICIS data showed.

However, several producers received more buying enquiries in the past two weeks amid the uptrend in domestic Chinese prices. They expect buying indications to increase in the short term if yuan-denominated prices continue on an uptrend from the previous two weeks.

When the peak season for downstream sectors starts in mid-August, buyers may increase their buying ideas to meet the stable-to-firm offers in the market, the producer added.

Market sources attributed short supply for both August and July shipments to the northeast Asia region to an unexpected shutdown of a producer’s plant in early July and better spot netbacks in the India market for southeast Asia-based producers.

The better market in India is a result of a turnaround at an oxo-alcohols producer’s plant, India-based buyers said.

A southeast Asia-based producer, who had previously been offering on a CFR China basis, said it had sold out of spot cargoes until end-August because of an increase in demand for NBA from the India market and better netbacks to the country.

It added that despite offering lower at $1,230-1,240/tonne CFR China, it received lukewarm response from buyers and decided to pull its cargoes to India instead because of the $30-40/tonne difference in buying indications.

Some buyers were taking a cautious stance despite the fast rise in domestic prices in China, in light of new plant start-ups in China starting end-July/early August, as the additional supply may lead to a downward pressure on yuan-denominated prices.

A downstream butac maker said that demand is still soft but stable because of the seasonal lull from the coating industries, and it is unclear whether buyers will be able to accept their price hikes resulting from domestic n-butanol (NBA) price hikes.

While southeast Asia-based producers said they are not looking at price hikes for their spot cargoes yet, a northeast Asian producer said it is looking towards a price hike because of rising feedstock propylene costs since early July.

However, market participants say that once offers for August shipments start to rise, it is possible that the stand-off between buyers and sellers in the past two months may continue because most buyers expect a bearish outlook following August after the potential new plants in China start up.

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

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