SINGAPORE (ICIS)–Asian butadiene (BD)
producers are turning to the acrylonitrile
butadiene styrene (ABS) market for demand amid
eroded margins and weak buying interest from
main downstream synthetic rubber sector.
“The downstream ABS makers use less BD and can
afford to pay more for BD, so some BD suppliers
will continue to hold out for higher prices due
to the eroded margins,” a trader said.
ABS accounts 15-20% of the BD market, while
synthetic rubbers have a much bigger share at
roughly 70%, according to market sources.
Regional BD producers have been unwilling to
offload cargoes at below $400/tonne CFR (cost
and freight) northeast (NE) Asia following
recent spikes in crude and naphtha costs.
But supply in the region is ample and will
further grow given an estimated 150,000 tonnes
of deep-sea cargoes from Europe and the US
arriving in Asia in the second and third
quarters.
This condition dampens spot buying interest
from major consumers in the styrene butadiene
rubber (SBR) and polybutadiene rubber (PBR)
markets, widening the gap between buying and
selling ideas.
On 12 June, spot BD prices were assessed down
$10/tonne week on week at $330-400/tonne CFR NE
Asia, ICIS data showed.
“Naphtha price is similar to BD price, and
regional producers will hold out for at least
$400/tonne CFR basis due to the margins
erosion,” a trader said.
At midday, naphtha prices stood at $341/tonne
CFR Japan, ICIS data showed.
BD must be higher than naphtha by about
$100-150/tonne for BD producers either to break
even or generate margins depending on their
costs structure and sales strategy,
market sources said.
“The market is imperfect, it will eventually
find its equilibrium,” a regional BD producer
said.
Focus article by Helen Yan
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