Butadiene exports from Europe to Asia have resumed due to a fresh set of cracker turnarounds in Asia, but it is not clear whether or not this extra demand will be short-lived, traders said.
Asian butadiene prices have risen $10 since the start of August to be assessed at $1,035/mt CFR China. European butadiene was assessed at $735/mt FOB Rotterdam Monday. A $300/mt spread between European and Asian prices indicates a narrowly open arbitrage.
At least two producers have confirmed sales of cargoes over the past 10 days, one of whom said he was trying to negotiate a second deal.
The cargoes were heard to have been sold to traders and and one consumer source said that one of these traders was finding it difficult to sell the cargo in Asia.
"The trader initially looked for a customer in Asia. But is now looking for one [customer] in Europe," the source said.
A cargo of 1,000 mt was heard sold at $735/mt FOB Rotterdam and the trader who bought the cargo was said to be looking for more.
Cargoes from Europe to Asia are usually exported in lots of 5,000 mt or higher. Traders in Europe started procuring cargoes after news of upcoming turnarounds in Asia.
According to the available turnaround schedule for Asia, at the end of July, Taiwan's Formosa Petrochemical shut its No.2 naphtha-fed steam cracker for 50-day maintenance.
Indonesia's Chandra Asri plans to cut the operation rate of its naphtha-fed steam cracker at Cilegon in the second half of August. The steam cracker has a capacity to produce 220,000 mt/year of butadiene feedstock crude C4.
South Korea's SK Global Chemical plans to shut its 660,000 mt/year capacity naphtha-fed steam cracker in Ulsan from September 17 to October 24 for maintenance. Shell Chemicals restarted its Pulau Bukom, Singapore, cracker in mid-July but was heard to be facing technical problems. "Considering butadiene from Shell Singapore is considered to have a higher purity, it helped to stimulate exports from Europe," a trader said. Shell runs a 186,000 mt/year butadiene unit at its Singapore complex.
However, downstream synthetic butadiene rubber plants in Asia were heard running at an average of 50% and this had helped soften the impact of tight butadiene supplies, trade sources said.
"Prices are volatile. People are not sure how long will [butadiene] prices in Asia hold on for," a trader said.
