SINGAPORE (ICIS)–Spot butadiene (BD) prices in Asia may continue to fall, dragged down by the slump in China’s domestic market, industry sources said on Friday.
“Buyers are now only willing to pay around the $1,100/tonne CFR [cost and freight] NE [northeast] Asia level, equivalent to the import parity price of CNY9,000/tonne delivered in east China,” a downstream Chinese synthetic rubber (SR) producer said.
On 5 May, regional BD spot prices were assessed at $1,295/tonne cost and freight (CFR) NE (northeast) Asia, down by 22% since 31 March, according to ICIS data.
BD prices in Asia have been falling because of ample supply and weak demand.
On 11 May, domestic BD prices in east China plummeted to yuan (CNY) 9,000-9,200/tonne DEL (delivered), down by more than CNY2,300/tonne from 5 May, according to data compiled by the China editorial team at ICIS.
Chinese BD producers such as Sinopec and Liaoning Huajin Tongda Chemical cut their domestic prices this week, prompting buyers to retreat to the sidelines.
Downstream SR producers refrained from procuring BD cargoes from the spot market as they expect the decline in regional prices to continue.
“We will just wait and see, as we expect the BD price to fall lower, given the sharp falls in China,” a downstream SR producer said.
SR producers are holding out for much lower BD costs amid decline in their own product prices, tracking movement in the natural rubber (NR) market, industry sources said.
NR and SR prices tend to impact each other as they are substitute feedstocks for the production of tyres.
With NR hovering at around $1,500/tonne, there was little buying support for SR raw materal BD at above $1,100/tonne CFR NE Asia.
On 11 May, PBR prices fell $100/tonne week on week to $1,900-2,000/tonne CFR NE Asia, ICIS data showed.
“There is too much uncertainty over the price direction of NR and BD, so the downstream SR producers are holding back their BD spot purchases,” a regional BD supplier said.
Focus article by Helen Yan
($1 = CNY6.90)