SINGAPORE (ICIS)–Spot butadiene (BD) prices in Asia may rise further this week, but gains may be capped by weak demand from downstream polybutadiene rubber (PBR) sector, market sources said on Monday.
Major producers raised their BD offers for October shipment to $970-1,000/tonne CFR (cost and freight) northeast (NE) Asia this week, citing limited supply, they said.
On 4 September, BD spot prices were assessed at $920-960/tonne CFR NE Asia, up by $10/tonne week on week, according to ICIS data.
Prices have rebounded as Chinese buyers were heard seeking spot product. Market players were expecting prices to increase further as supply will tighten on scheduled cracker shutdowns.
Lotte Chemical’s 150,000 tonne/year BD unit in Daesan, South Korea; CSPC’s 165,000 tonne/year plant in Huizhou, China; and CPC’s 53,000 tonne/year unit in Linyuan, Taiwan, will shut for maintenance in October and November.
Late this month, Chandra Asri’s 100,000 tonne/year BD plant in Cilegon is also scheduled to be taken off line for 80-90 days. Expansion works will be carried out at the unit.
From early July, spot BD prices have plunged by 35% before rebounding in mid-August, according to ICIS data.
Downstream PBR producers are mulling further output cuts amid waning demand in the key China market, to resist any further spikes in feedstock BD prices, industry sources said.
“We can accept BD offers no higher than $920/tonne CFR NE Asia as our margins are being severely eroded due to the poor downstream PBR market,” a downstream PBR producer said.
China, which is the world’s largest automotive market, has been registering declining vehicle sales and production.
“It is very tough for PBR makers who have no upstream feedstock BD supply as we are squeezed both by the volatile upstream BD feedstock prices and weak PBR prices,” a PBR producer said.
Downstream PBR prices have stayed at an average of $1,225/tonne CFR NE Asia since 20 August, ICIS data showed.
“There is trader interest to procure BD, but it is hard to say really whether the BD price uptrend is sustainable,” a trader said.
It will depend on how the downstream rubber market will behave, “whether the synthetic rubber prices can go up as well, so as to be able to support the BD price uptrend”, a BD supplier said.
