NE Asia PBT prices seen stable for August on supply-demand balance

SINGAPORE (ICIS)–Spot prices of polybutylene terephthalate (PBT) in Asia are likely to remain unchanged for the rest of August on the back of balanced supply and demand fundamentals, market sources said on Tuesday.

An atmosphere of caution in the PBT and upstream 1,4-butanediol (BDO) markets also contributed to expectations of stable pricing, sources added.

According to market players, regional buyers were steadily purchasing cargoes on a need-to basis.

Even though volumes could not be described as large, buying activity was constant, some sellers said.

In late July, when offers for August shipment lots first emerged, sellers’ attempts to hike prices were quite visible, sources said.

Some market players said that August offers had initially stood at $1.70/kg CIF (cost, insurance & freight) NE Asia and above, but these offers failed to translate into deals as buyers found these offers too steep to be workable for their margins.

Instead, August discussions were mostly range-bound at $1.60-1.65/kg CIF NE Asia, sources said.

This was also the assessed price range for the week ended 1 August, ICIS data showed.

“In our personal opinion, offers above $1.65/kg CIF NE Asia seem unlikely to be accepted by buyers,” a northeast Asia-based PBT maker said in Mandarin,

“Most of our buyers are still enquiring and purchasing, but this demand is merely stable, and not robust enough to lead to price increase,” the PBT producer said.

“India’s demand for August is showing signs of picking up from July, as the annual monsoon is coming to an end,” the producer added.

However, India is not a big buyer for northeast Asian-origin PBT, as competitively-priced Middle East-origin PBT is available.

“Further downstream demand is lukewarm, we don’t expect PBT buyers to stock up on cargoes too actively,” a separate northeast Asian seller said.

“Furthermore, looking at feedstock BDO, local prices in Taiwan have finally started softening in mid-2017. As BDO buyers, we need to exercise caution in procurement too, lest prices slip further and our margins are compromised,” the seller added.

Amid existing market conditions, sellers are mostly holding on to range-bound workable selling ideas and offers at $1.60-1.65/kg CIF NE Asia.

Attempts to increase prices were largely unseen in early August, after firmer offers for August-loading lots were observed in late July, market players said.

“We were taken by surprise when we received higher offers. Currently, demand in South Korea and other northeast Asian markets is slower due to the summer holidays. It is not possible for us as buyers to accept higher prices for PBT for August,” a northeast Asia-based PBT buyer said,

Going forward, most market players said it is unlikely for PBT prices in northeast Asia to register significant movement, be it upwards or downwards, as existing market conditions are well-balanced.

Prices for PBT have been largely on an uptrend since the beginning of 2017, following gains in upstream BDO prices amid snug spot availability throughout Asia.

PBT is a thermoplastic engineering polymer that is used as an insulator in the electrical and electronics industries.

Top image: Cable clamps mounted on cables (Photographer Mito Images/REX/Shutterstock)

Focus article by Jasmine Khoo