SINGAPORE (ICIS)–Spot butadiene (BD) prices in Asia may continue their uptrend for the rest of December on the back of tight supply and strong demand, market sources said on Wednesday.
Fresh spot shipments this week were offered at $1,800-1,850/tonne CFR (cost and freight) northeast Asia, they said.
On 2 December, BD prices were assessed at $1,650/tonne CFR NE Asia, up by 20% since 11 November, according to ICIS data.
“It is a sellers’ market now as supply is really tight while demand is strong,” a trader said.
Demand has continued to gather momentum in China, where downstream synthetic rubber plants are running at full steam this month ahead of the expected lull in market activities toward the second half of January next year, market sources said.
“We are running our styrene butadiene rubber (SBR) at full rate now in December to build up our inventories as Lunar New Year falls in January next year,” a Chinese SBR producer said.
The Lunar New Year falls on 28 January in 2017, which the holiday observed in most parts of northeast and southeast Asia.
In the key China market, trading and production activities are expected to wind down from mid-January as workers make preparations to leave for their home towns for the week-long festivities.
The surge in Chinese appetite for scarce spot BD has spurred major Asian BD producers to hike offers above $1,800/tonne CFR NE Asia this week.
BD supply in the domestic market was crimped by a week-long outage at Fujian Refining & Petrochemicals’ (FREP) facilities in south China in late November, at a time when downstream plants are ramping up production, market sources said.
FREP’s two BD units with a combined capacity of 180,000 tonnes/year restarted in early December and are currently running at around 60% of capacity.
Domestic BD prices in east China have spiked by about Chinese yuan (CNY) 3,000/tonne since mid-November to CNY16,100-16,300/tonne DEL (delivered) on 6 December, ICIS China data showed.
Spot cargoes had been snapped up in Asia by traders seeking to capitalize on the sudden surge in demand for BD.
A 2,000-tonne cargo offered via a tender for late-December shipment drew strong interest and was sold to a trader on 2 December at $1,610/tonne FOB (free on board) southeast (SE) Asia.
With freight costs at around $120-130/tonne from southeast Asia to northeast Asia, the deal translates to $1,730-1,740/tonne CFR NE Asia.
Focus article by Helen Yan
By Helen Yan
