Focus article by Helen Yan
SINGAPORE (ICIS)–Spot butadiene (BD) prices in Asia may rise further on expectations of tighter supply as regional crackers will undergo turnaround in the second quarter, but gains may be capped amid uncertainty in the crude market, industry sources said on Wednesday.
BD producers have raised their offers this week to $900/tonne CFR (cost and freight) northeast (NE) Asia for April shipments.
On 6 March, spot BD prices were assessed at an average of $810/tonne CFR NE Asia, up by more than $100/tonne from 6 February, ICIS data showed.
“The BD price uptrend in Asia is mostly driven largely by speculative trades as the downstream synthetic rubber prices are still lagging behind,” a trader said.
BD prices have rapidly increased as traders have been actively scouting for spot cargoes to build positions in a market on an uptrend, industry sources said.
Production of BD will be constrained with a number of regional crackers due for maintenance from March to July, including Maoming Petrochemical in China and LG Chem, Samsung Total and Yeochun NCC (YNCC) in South Korea.
In Japan, Maruzen Petrochemical’s 520,000 tonne/year naphtha cracker unexpectedly shut on 2 March and may be back on line by the end of this week.
Buying interest in China is expected to improve following the resumption of production at a number of downstream synthetic rubber plants after the Lunar New Year holiday.
China was on holiday on 18-24 February.
A number of downstream styrene butadiene rubber (SBR) and polybutadiene rubber (PBR) plants in the country, including Zhejiang Weitai Rubber, Zhechen Rubber and Zhejiang Transfar have recently resumed production after an extended shutdown at the facilities.
Demand may further get a boost with a new 50,000 tonne/year PBR plant of Ube-Lotte expected to start up soon in Malaysia. The plant, which is a joint venture between Japan’s Ube Industries and South Korea’s Lotte Chemical, is now undergoing test trial, market sources said.
But volatile crude oil prices and a strengthening US dollar against Asian currencies have prompted buyers to be cautious, market sources said.
“Demand from the derivative synthetic rubber makers may not be robust enough to support the sharp increases in BD prices, given the sluggish macroeconomic conditions and volatility in crude oil prices,” another trader said.
BD gains may not be sustained all throughout the second quarter as price direction will likely be dictated by crude and downstream demand, market sources said.
“April will likely see the BD price still trending up, but it is difficult to see further than this, as supply may not be so tight as spot supply from southeast Asia [and] India is also available,” the trader said.
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
