Far East looks to Iran, India for butadiene as supply tightens

(Platts report)

Dubai, United Arab Emirates – East Asian countries, especially South Korea and Taiwan, are increasingly importing butadiene cargoes from Iran, India and Southeast Asia as supplies within the region have been tight for a while, trade sources said this week.

About 9,000 mt (megatonnes) of Iranian-origin butadiene is expected to arrive in the Far East by mid-August. The first parcel of 4,500 mt is to be delivered to an end-user by end-July. The second cargo, also with a volume of 4,500 mt is to be delivered to South Korea shores by mid-August.

The Japanese trader who bought a 2,000 mt cargo from Thailand's Bangkok Synthetics Co. Ltd last Friday (18 July) subsequently offered it into South Korea and Taiwan at $1,600/mt on a CFR (cost and freight) basis. Several trade sources said that a 4,000 mt tender, for early August loading, expected to be allotted by India's Reliance Industries this Friday (25 July) is also expected to head either to Taiwan or South Korea.

End-users in the region are now entering into negotiations for European-origin butadiene cargoes. An acrylonitrile-butadiene-styrene manufacturer in China was heard to be currently negotiating a European-origin 3,000-4,000 mt butadiene cargo this week. "We are still negotiating," the end-user said Wednesday (23 July).

The rise in demand for imported butadiene cargoes was reflected in data released late Tuesday (22 July) by China's General Administration of Customs showing that imports of butadiene in June more than tripled from the previous month to 14,399 mt.

However, downstream manufacturers are not finding enough cargoes to run their plants at full rates. China's Ningbo LG Yongxing Chemical has lowered the operating rate of its 700,000 mt/year ABS plant at Ningbo to 75% of capacity from more than 80% at the start of July, on butadiene shortage.

The prime reason for the sudden demand for imported cargoes in the Far East is the turnaround season that began in early July and is expected to last until September. Taiwan's CPC shut its No. 4 naphtha-fed steam cracker in Linyuan for a two-week maintenance in early July, sources said.

The cracker can produce 380,000 mt/year of ethylene, 193,000 mt/year of propylene and 90,000 mt/year of butadiene. However, CPC's No. 5 naphtha-fed steam cracker at Kaohsiung, which can produce 500,000 mt/year of ethylene, 250,000 mt/year of propylene and 80,000 mt/year of butadiene continues to remain shut.

Taiwan's Formosa also plans to shut its No. 3 naphtha-fed steam cracker in Mailiao from 15 August for 45 days of annual maintenance. The No. 3 steam cracker is able to produce 1.2 million mt/year of ethylene, 600,000 mt/year of propylene and 180,000 mt/year of butadiene.

In South Korea, Yeochun NCC will slash the operating rate of its 240,000 mt/year butadiene plant at Yeosu in mid-September to 80% from near 100% currently, a company source said Tuesday (22 July). The company has three naphtha-fed steam crackers at Yeosu. It plans to shut its No. 3 cracker mid-September for a month long annual maintenance, the source said.

The cracker is able to produce 450,000 mt/year of ethylene, 230,000 mt/year of propylene and 150,000 mt/year of crude C-4 feedstock. YNCC supplies crude C-4 feedstock to the butadiene plant from the No.3 steam cracker.

Further, the use of LPG as a feedstock instead of naphtha in most of the crackers in South Korea has considerably reduced the butadiene yield, a South Korean producer said.

"Considering the high demand for butadiene, we want to raise production but we cannot considering we already have a long-term contract for LPG and are forced to use it as a feedstock," a South Korean producer said.