Asian butadiene market at multi-weeks lows; downward pressure might persist

The Asian butadiene market has just plunged to the lowest level in twelve weeks no thanks to the improved supply condition and weakening downstream demand condition. As of 12 September 2018, spot butadiene based on FOB South Korea term stood at $1590/ton, down $160/ton from the cyclical peak during mid-late August.

The downtrend might persist in the coming week, sources said, as regional supply is improving in-line with the restart at South Korean producer Yeochun Naphtha Cracking Centre (YNCC). The company brought the 240,000 tons/year butadiene unit on-stream on 1 September after two weeks of unexpected shutdown. 

“In the meantime, we do not see strong buying interest from the downstream synthetic rubber and ABS buyers. We are looking to destock some cargoes on hand now,” an international trader informed.

Butadiene is one of the main feeds in producing synthetic rubber, which can be found in the production of car tires. China-made car tires are facing the threat of an undetermined tariffs rate (either 10% or 25%) when export to the USA. The third list that the USA government plans to impose on imports from China covered more than 6000 products, including pneumatic radial tires, of rubber used on motor cars (including station wagons and racing cars), under HS code 4011.10.10. The two governments are reviving talks to resolve the trade war and players fear that would the trade talks fail to yield any result, the US government might press ahead with the third round of tariffs.