A narrow butadiene arbitrage window between Europe and Asia opened this week as tight supplies in the latter propelled the Platts CFR China marker to a near nine-month high, trading sources said Monday.
In Asia, butadiene prices rose $100/mt week on week to $1,630/mt CFR China and by $70/mt week on week to $1,625/mt CFR Taiwan Friday on higher demand and tight supplies. In tandem with the jumps registered by Asian markers, China Petroleum and Chemical Corp., or Sinopec, raised its ex-works butadiene price across the country by Yuan 500/mt to Yuan 11,500/mt Friday. On an import-parity basis, this translates to $1,551/mt.
In the European spot markets, prices were assessed by Platts up $10/mt on the week Friday at $1,309/mt FOB NWE. The restart of Sabic units at Geleen and Wilton and the start of the new BASF plant in Antwerp, Belgium was expected to pressure butadiene prices. FOB NWE prices, were pegged at $1,300/mt Monday.
Last week, one European trading company was heard to be negotiating a Europe-origin 3,000-4,000 mt butadiene cargo sale with an acrylonitrile-butadiene-styrene manufacturer in China, but a deal was not heard to have materialized. The trader is learnt to have fixed a 6,500 mt CC4/butadiene cargo, loading in ARA August 10 with Far East discharge options.
ASIAN RALLY EXPECTED TO BE SHORT-LIVED
About 2,000 mt of butadiene was heard sold Thursday on a CFR China basis at $1,670/mt CFR China but the deal could not be confirmed with the Chinese distributor who bought the cargo. Also, the Asian trader who sold the cargo said he does not expect high butadiene prices in Asia to prevail for long.
End-users expect tight supplies in Asia to ease after around 9,000 mt of Iran-origin butadiene arrives into Asia by mid-August. “Butadiene tends to take an impact from natural rubber prices. As natural rubber markets in Asia seem to be bearish now, we don’t see a long-term support to butadiene prices,” an Asian trader said.
Butadiene serves as a feedstock for synthetic rubber which is an alternative to natural rubber.
Since synthetic rubber and natural rubber have a correlation, butadiene too is impacted by natural rubber prices. In Asia, the FOB Singapore marker for Ribbed Smoked Sheet 3 loading in August slipped 2 cents/kg from Thursday to be assessed by Platts at $1.98/kg Friday on lower demand and as sellers negotiated at slightly lower levels. The FOB Singapore marker for RSS-3 September slipped 3 cents/kg in the same period to $1.97/kg.
– Platts.com
