Market and product

Asia butadiene (BD) prices are likely to rise this week, with major producers raising offers on the back of tightening supply, even as deep-sea cargoes are heading into the region in March and April, market sources said on Wednesday.

“Spot offers are now at $850/tonne FOB (free on board) Korea,” a major South Korean producer said.

With freight costs in intra-regional trades hovering at around $50/tonne, the BD offer will be $900/tonne on a cost-and-freight (CFR) northeast (NE) Asia basis, market sources said.

“Supply is tight, and offers are now going up,” a trader said.

On 12 February, BD spot prices were assessed at $800-850/tonne CFR NE Asia, unchanged from the previous week, ICIS data showed.

“Most players are now back in the market from the Lunar New Year holiday, and with BD supply so tight in Asia, we are getting several enquiries from buyers,” a trader said.

The Chinese market was closed on 7-13 February, while other key markets, including South Korea and Taiwan shut for up to a week for the Lunar New Year.

A spate of BD plant shutdowns, including outages, and production cuts have tightened regional supply, buoying up prices in the spot market notwithstanding the influx of deep-sea cargoes from Europe, industry sources said.

In South Korea, Yeochun NCC (YNCC) is looking at cutting production at its 240,000 tonne/year BD unit by 10-20% in March from 100% currently. Supply of crude C4 needed for production at the unit will be limited as one of the company’s three crackers will be shut for maintenance for about a month.

In Singapore, the Petrochemical Corporation of Singapore (PCS) plans to shut its 100,000 tonne/year BD unit for repairs for three weeks from late February.

Meanwhile, speculations circulating the market that Shell may extend the unexpected shutdown of its Pulau Bukom cracker complex in Singapore up to September were also driving up BD prices, market sources said.

Initially, the shutdown was expected to last four to six months from early December 2015, when the company declared a force majeure on base chemicals supply from its Bukom site.

In Indonesia, Chandra Asri, is currently running its 860,000 tonne/year cracker in Cilegon, Indonesia, at just around half its capacity due to technical issues after the plant’s ethylene capacity was expanded.

Asia’s BD market appears to be shrugging off some 20,000 tonnes of material coming from Europe that will arrive in the region in the next two months following the opening of the arbitrage window earlier this year, market sources said.

BD is used in the production of synthetic rubbers, which go into tyres for the automotive sector.