SINGAPORE (ICIS)–Spot butadiene (BD) prices in Asia may resume their upward trend, driven by strong post-holiday demand in the key China market, industry sources said on Wednesday.
On 3 February, BD prices were assessed at $2,650-3,050/tonne CFR (cost and freight) NE Asia, largely steady for three consecutive weeks, ICIS data showed.
“China demand still looks strong and there is a lot of talk that Chinese buyers are willing to pay a higher price for BD but buyers outside of China are cautious,” a trader said.
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Spot offers rose to $3,100-3,150 tonne/year CFR NE Asia this week, market sources said.
From early December 2016 to 13 January 2017, BD prices had surged by more than 70% to an average of $2,850/tonne CFR NE Asia, ICIS data showed.
But BD prices halted their sharp increase since the second half of January, as trading activities in China had winded down leading to the Lunar New Year on 28 January.
China was on holiday on 27 January to 2 February.
This week, Chinese buyers were heard seeking late February and March shipments in view of limited availability in the domestic spot market.
In light of the strong Chinese demand, there may be strong interest in two sales tenders closing this week.
India’s ONGC Petro additions Ltd (OPaL) issued a tender for 2,000 tonnes of BD for late-February loading, while Indonesia’s Chandra Asia Petrochemical is selling a March-loading 2,000-tonne parcel.
Traders are expected to submit bids for the tenders in light of the strong Chinese demand, but others may take a more cautious stance following the recent spike in BD prices.
“The buyers outside of China are unwilling to pay above $3,000/tonne but China buyers are willing to pay a higher price,” a supplier said.
Major downstream synthetic rubber makers in Taiwan and South Korea had put up a strong resistance to any further price increases. This led to a widening of the assessed price range to $2,650-3,050/tonne CFR northeast (NE) Asia on 20 January, ICIS data showed.
“We expect BD prices to go up further as BD supply is tight in China and the Chinese downstream synthetic rubber producers are seeking to import BD,” a Chinese synthetic rubber producer said.
