Asia BDO falls on weak buying, soft demand; outlook cloudy

SINGAPORE (ICIS)–Asia’s import butanediol (BDO) prices were stable-to-soft this week because of the weak buying sentiment and sluggish demand with industry sources expecting bearish market to persist for the rest of the year.

Asia bulk BDO prices fell by $50/tonne at the low end to $1,100-1,200/tonne CFR (cost & freight) China in the week ended 10 November, according to ICIS.

Most suppliers were reluctant to reduce their prices as they were under cost pressure, although buying ideas from end-users fell sharply in line with falling domestic prices.

Sporadic selling ideas for bulk cargoes remained at $1,200/tonne CFR CMP (China main port), while most buying ideas were capped at $1,100/tonne CFR CMP.

The wide buy/sell gap continued to hamper trade, market sources said.

“We have to reduce our buying ideas because domestic prices continued to fall in the past few weeks. And we could not afford higher prices due to the poor demand and slow sales,” a major China-based buyer said.

Most end-users said they may consider buying import cargoes if import prices fell to a similar level as domestic prices.

Most market participants said demand from the downstream polytetramethylene ether glycol (PTMEG), gamma-butyrolactone (GBL) and polybutylene terephthalate (PBT) sectors was very sluggish, which led to limited buying activities for feedstock BDO.

The average operating rate of PTMEG, GBL and PBT plants in China were at 60-70%, 50% and 51%, respectively, sources said.

“Our PBT business is so bad this year, so we are always running the plants at only half capacity, And I don’t think the demand will improve in the coming months as the year-end is usually the lull season for PBT business,” a PBT producer said.

China’s foreign trade continued to shrink in October, with exports in the month decreasing by 6.9% year on year to $192.4bn and imports down by 18.8% to $130.8bn, China Customs data showed.

In the domestic China market, BDO prices also dropped further as local produces trimmed prices to attract sales.

Rising supply, coupled with soft demand, exerted downward pressure on the BDO market with the situation unlikely to change in the near future.

China’s major BDO producer Xinjiang Tianye started up its new 60,000 tonne/year BDO plant in end-October, sources said.

The average operating rate of China’s BDO plants was around 42% in the week.

Discussions and deals for small volumes of BDO were heard at yuan (CNY) 8,100-8,200/tonne DEL (delivered) China, while discussions and deals for large volume cargoes were at CNY7,900-8,000/tonne DEL China.

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

Focus article by Judith Wang