ERJ staff report (TP)
Singapore − Asian spot butadiene prices have slumped 18-20 percent in November under selling pressure as buyers retreated amid ample supply, reported Miguel Cambeiro and Meghan Gordon from Platts.
Key benchmark CFR China has fallen $360 (€266.5) per tonne or 20 percent since 31 October to be assessed at $1,400 (€1,036) per tonne Thursday (14 November). The FOB Korea benchmark has dropped $300 (€222) per tonne or 18 percent over the same period to $1,390 (€1,029) per tonne.
Week on week, CFR China is down $195 (€144.4) per tonne and FOB Korea is down $156 (€115.5) per tonne.
That puts the CFR China spot prices 33 percent lower than the 2013 high of $2,105 (€1,558) per tonne seen 27 February and FOB Korea 34 percent lower than its 2013 high of $2,100 (€1,554) per tonne on the same day.
The butadiene price slump pushed production margins into negative territory Thursday (14 November) for the first time since 26 September. Assuming a manufacturing cost of $500 (€370) per tonne, naphtha C+F Japan cargoes assessed at $951.75 (€704.55) per tonne and FOB Korea butadiene assessed at $1,390 (€1,029) per tonne, the butadiene margin was minus $61.75 (€45.71) per tonne Thursday (14 November), down from plus $77.25 (€57.18) Wednesday (13 November), according to Platts data.
Offers quickly fell below $1,500 (€1,110) per tonne last week as buyers stayed away from the market.
Sources said a deal for two 2,000-tonne lots was done at $1,400 (€1,036) per tonne, one CFR China and the other CFR Taiwan, for delivery in the second half of December. The seller and buyer confirmed the trade but asked not be named.
Participants said this week that the few Chinese buyers in the market are not willing to pay above $1,300 (€962) per tonne.
Traders said limited buying interest compounded by pressure to offload material before year-end fiscal declarations created ample supplies. A source said Chinese automakers and tire makers were also shrinking inventory for tax reasons, which further reduced butadiene demand.
Producers called it a buyer's market, with some deep sea cargoes arriving and few plant turnarounds.
"Demand is no good this year," he said. "The growth rate looks [to be] zero."
Despite some fixed-price trades done this week, the market's bearishness made buyers less willing to sell on a fixed-price basis, sources said.
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Full story from Platts
