Asian butadiene/naphtha spread hits widest in 10 months on tight butadiene supply

The Asian butadiene/naphtha spread hit its widest level in 10 months Monday, September 15, amid crude-led weakness in naphtha feedstock while butadiene prices remain high on tight supply.

The spread between FOB Korea butadiene price and CFR Japan naphtha value was assessed at $619.25/mt Monday, up $13/mt from Friday. It was last wider November 8, 2013, at $632.38/mt.

The Asian butadiene market has been on an uptrend since late August, driven by tight supplies amid butadiene turnaround season.

Taiwan’s Formosa shut its 180,000 mt/year butadiene plant in Mailiao from August 15 for annual maintenance. The plant is due to be restarted around the end of September.

As a result, the FOB Korea butadiene price benchmark was assessed at $1,480/mt Monday, its highest since August 6, when the marker was assessed at $1,485/mt, according to Platts data.

On the other hand, the CFR Japan naphtha price benchmark has been on a downtrend from late August amid falling crude oil markets.

The CFR Japan naphtha price was assessed at $860.75/mt Monday, its lowest since July 2, 2013, when it was assessed at $860/mt, Platts data showed.

But some market sources said they do not expect the spread to widen much from the current level, as the Asian butadiene market will likely come under pressure as deepsea supplies arrive in Asia.

Trading sources said a European-origin cargo of 6,000 mt was offered to Asia at $1,600/mt CFR Northeast Asia.

The CFR China butadiene benchmark was assessed at $1,530/mt Monday, while the FOB Rotterdam butadiene price was assessed at $1,160/mt.

Current freight costs from Europe to Asia are estimated at $350/mt. Some trading sources also said there is a possibility that US-origin cargo to be offered to Asia.

Last Friday, the CIF USG butadiene price was assessed at 55 cents/lb, or $1,212.20/mt. A typical freight from the US to Asia is at around $360-370/mt.

– Platts.com