Recovery in Asian butadiene costs feared unsustainable

The butadiene costs based on FOB South Korea term jumped $50/ton since the beginning of the year to $1170/ton on 11 January with full prospect to increase further in the coming days. Stronger local market in China as a result of prompt-cargoes-hunting help elevating the import market, sources said; however, the sustainability of the current trend is in deep question.

Industry participants reported that butadiene costs based on FD China term currently stand in the range CNY11,400-11,500/ton ($1454-1467/ton without VAT), DDP East China, softens slightly compared to the first week of the year. With such local prices, sources said that buyers might accept import butadiene prices at around $1200/ton FOB South Korea term. 

“The thing is that even local ground is losing momentum and buyers are not interested in cargoes that are meant for February arrival. We think there is clearly a cap to the upside of the market,” a trader commented. 

In the downstream ABS market, suppliers have been attempting to introduce small to moderate hike with the support from the upstream butadiene costs. Just that buyers are not keen to build too high stock given the uncertain market outlook in the post-Lunar New Year term.

“The US-China trade war is hurting businesses. This year might be a bumpy year for automotive and home appliances sectors. We prefer to adopt a more cautious stance,” another source added.