Price and market trends: NE Asia NBA buy-sell gap may narrow if domestic prices rise

24 July 2014 11:23 Source:ICIS Chemical Business

Short supply to northeast Asia attributed to unexpected shutdown in early July and better spot netbacks in India

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 16 July.

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 a rise 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.

By Trixie Yap