Petrotahlil --Asia’s butadiene (BD) spot market may continue to see demand outpacing supply in the near term, although buyers have turned cautious and players are adopting a wait-and-see stance, following the price surge in the Chinese domestic market.
The surge in the Chinese domestic market has seen upward pressure in the US dollar-denominated market.
Local BD spot prices surged to Chinese yuan (CNY) 9,750/tonne DEL (delivered) in east China on 22 October, up by around 48% since 9 October, ICIS data showed.
The robust Chinese domestic market and a strong Chinese yuan against the US dollar prompted firmer spot offers from sellers, seen at around $1,100-1,150/tonne CFR (cost & freight) northeast NE Asia this week, market sources said.
On 16 October, BD spot prices averaged at $890/tonne CFR NE Asia, up by about 37% since early September, ICIS data showed.
“We cannot accept this kind of price hike, it is too sharp a price jump and not workable for synthetic rubber makers, like SBR and PBR,” a synthetic rubber producer said.
Styrene butadiene rubber (SBR) and polybutadiene rubber (PBR) prices have increased recently on improved demand, but the pace of price increases in these markets lags behind the surge in the BD prices, market sources said.
Non-oil grade SBR 1502 and high-cis PBR prices have increased by about 20% since early September to $1,450/tonne CIF (cost, freight and insurance) China and $1,500/tonne CFR NE Asia respectively this week, ICIS data showed.
Margins of the downstream SBR and PBR makers are squeezed by the BD price increases, market sources said.
“It is a question of affordability and the downstream SBR and PBR makers may not be able to accept the soaring BD prices as their margins will be eroded,” a trader said.
The support for the BD prices is driven mainly by the acrylonitrile butadiene styrene (ABS) and acrylonitrile butadiene (NB) latex makers, market sources said.
ABS is the largest volume engineering thermoplastic resin and is used in automobiles, electronics, appliances and recreational products, while NB latex is used to make medical gloves for the robust healthcare industry.
“It all depends on China whether the price surge is sustainable,” a BD supplier said.
China’s economy grew by 4.9% in the third quarter, following a 3.2% growth in the second quarter and a contraction of 6.8% in the first quarter, the National Bureau of Statistics said.
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Source : ICIS