Asian butadiene market surged on tightened supply

The Asian butadiene market surged $70/ton in a single trading day to reach $1400/ton based on FOB South Korea term as of 26 April 2018 on tightening supply condition across the region. This firming trend is expected to persist in the coming days, however, sources are not confident about the medium-term outlook.

The regional supply has been tight throughout the month of April amid several major shutdowns. Besides Indonesia’s Chandra Asri 60 days expansion work at the 100,000 tons/year butadiene plant, China’s Wuhan Petrochemical also shut its 120,000 tons/year butadiene unit for 20 days maintenance in H2 of April. Sinopec Zhenhai Refining & Chemical has taken its 1650,000 tons/year butadiene unit off-stream this month for 40 days overhaul. BASF-YPC is planning 20 days offline at its 130,000 ton/year unit this week.

To exacerbate the supply tightness condition, market sources reported that major South Korean producer – YNCC elected to export 5000 tons of butadiene cargoes to the USA for early May loading due to better profit margin, which encouraged other suppliers to hold firm on the remaining cargoes.

However, players are not expecting this current bull to run in May considering the sluggish demand condition from the downstream synthetic rubber sector. “Finished product inventories are high while synthetic rubber market has declined slightly. We are unable to accept the current butadiene costs,” a Chinese converter said. 

In addition, new supply from CNOOC and Shell Petrochemicals Co (CSPC) would arrive the market soon after a successful trial run in late March. The plant is able to produce 180,000 tons/year of butadiene, which might ease the current tightness condition to a certain extent.