BD surged to $4,250-4,300/tonne CFR (cost & freight) NE (northeast) Asia on 15 July, the highest on record since ICIS started tracking its prices in 1990.
Prices have more than doubled since the start of the year because of extremely tight regional supply and an open arbitrage opportunity to sell to the US, market sources said.
Some suppliers plan to hike offers to $4,500/tonne FOB (free on board) Korea, to which Asian buyers are expected to pose a strong resistance by significantly cutting down on consumption.
Some of the producers in downstream synthetic rubber and acrylonitrile-butadiene-styrene (ABS) sectors in South Korea, Taiwan, China and Indonesia are planning to cut operating rates or shut down their plants for maintenance.
Korea Kumho Petrochemical Co (KKPC), Asia’s largest synthetic rubber producer, will reduce its BD requirement by about 30% in August, said a company source, citing losses stemming from the unabated surge in feedstock costs.
The company will shut down its new 120,000 tonne/year butadiene rubber (BR) plant in Korea for a month from August. It will cut production at its derivative 70,000 tonne/year styrene-butadiene-styrene block copolymer (SBS) plant by half and run its other 222,0000 tonne/year BR plant at just 70% of capacity next month, the source added.
Taiwan’s TSRC will shut its 60,000 tonne/year BR plant in August, while China’s Shen Hua Chemicals will shut its 200,000 tonne/year styrene butadiene rubber (SBR) plant in August.
BD sellers, however, expect a further increase in prices next month despite the cutbacks in consumption from downstream synthetic rubber producers, citing a tighter-than-expected supply.
A slew of outages and a heavy turnaround schedule at crackers in the next two months will further squeeze the availability of spot cargoes, they said.
Some crackers in Singapore, Taiwan and India are currently running at reduced rates because of technical glitches, market sources said.
Shell’s mixed-feed 800,000 tonne/year cracker at Pulau Bukom in Singapore will shut down in August for repairs, said a company source, but declined to provide further details. The cracker has a 155,000 tonne/year BD extraction unit.
The cracker has been operating at reduced rates since May. It was taken off line in March because of operational issues.
In India, Haldia Petrochemical’s 670,000 tonne/year cracker and 100,000 tonne/year BD extraction unit in West Bengal have been running at reduced rates since early this month because of technical issues, said a company source without elaborating.
In Taiwan, meanwhile, Formosa Petrochemical Corp’s (FPCC) 700,000 tonne/year No 1 cracker and its downstream 109,000 tonne/year BD extraction unit have remained shut since 12 May, when a fire broke out at the company’s petrochemical complex in Mailiao.
The Taiwanese company is bringing forward a planned turnaround at its 1.2m tonne/year No 3 cracker, which has a 176,000 tonne/year BD extraction unit, to mid-August from September. The cracker would be shut down for 40-45 days.
BD producers are targeting prices of $4,500/tonne FOB Korea for late August or early September shipments, anticipating robust US demand and renewed Chinese buying interest next month.
“US demand is still strong and we are currently in talks for late August and early September shipments to the US,” said a Korean producer.
“We expect BD to rise to $4,400-4,450/tonne CFR in August as supply is still tight but prices may start to fall in September when supply eases,” a trader said.
($1 = €0.71)
