Focus story by Helen Yan
SINGAPORE (ICIS)–Spot butadiene (BD) prices in Asia look set to fall in the coming weeks on softening demand amid current market uncertainty, market sources said on Friday.
Weak global economic conditions, with China – the world’s second biggest economy and a key market for BD – continuing to slow down, are dampening market sentiment, they said.
Traders with BD stocks-in-hand are under pressure to offload cargoes at lower prices amid talk that offers have dropped below $1,500/tonne CFR NE Asia this week, market sources said.
Related Post
BD prices had been stable for three weeks up to 19 September, at an average of $1,525/tonne CFR (cost and freight) northeast (NE) Asia, according to ICIS data.
Offers have fallen as Chinese and South Korean buyers have largely fulfilled their requirements for October, market sources said.
“Traders are under pressure to sell and spot offers are now at around $1,450/tonne CFR NE Asia for October shipment,” a downstream synthetic rubber producer said.
Synthetic rubbers such as styrene butadiene rubber (SBR) and polybutadiene rubber (PBR) are the main downstream sectors of BD.
Meanwhile, demand is expected to further weaken with the key Chinese market going on a week-long National Day celebration from 1-7 October.
‘There is no demand, and if the Chinese are not buying, BD spot prices will fall,” a trader said.
SR producers are currently running their plants at reduced capacity given weak demand for their products.
“The geopolitical tensions and weak macro-economic conditions have all weighed on demand for synthetic rubber… Traders are averse to risk in these uncertain times,” another downstream SR producer said.
China’s PBR producers are running their plants at an average rate of below 45%, while SBR makers’ average operating rate stood at around 60-70% this year, according to Chemease, an ICIS service in China.
“Demand for synthetic rubber is poor and the SR producers cannot support high BD prices when natural rubber (NR) prices are so weak , “ another SR producer said.
SR and NR are substitutes for each other in the production of tyres for the automotive industry.
SMR20 tyre grade physical NR prices closed at $1,450/tonne FOB (free on board) Malaysia at the Malaysian Rubber Exchange on 25 September, down by about 11% from the start of the month.
– icis.com
