(ICIS) -- Asian butanediol (BDO) appears
poised to hit a new 10-month low in early next year because of weak demand in
key China market as construction slows in the country and a regional supply
overhang, industry players said on Wednesday.
On 20 December, bulk-based BDO cargoes were offered at
USD2,450-2,500/tonne (EUR1,862-1,900/tonne) CFR (cost and freight) CMP (China
Main Port). The offer level represented new nine-month low for BDO, and it was
the sixth consecutive week that BDO prices had fallen. Industry players,
however, said that the worst is yet to come.
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On Wednesday morning, one regional producer said that it was prepared to
continue reducing its offers in order to control its inventory levels. “Since
early November, we have not received a single enquiry for spot BDO cargoes. We
don’t foresee any improvement moving into the first quarter of 2012, given the
terrible state of the Chinese real estate market,” said the producer.
A downturn in real estate development slows down BDO sales because it is
a feedstock for polyurethane (PU), which in turn is used in products for the
construction industry in the form of flexible, high-resilience foam seating,
rigid foam insulation panels, high performance adhesives, surface coatings,
surface sealants and hard-plastic parts.
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The last time BDO prices plummeted below USD2,500/tonne CFR CMP was on 8
February 2011. Local media in China reported that government-sponsored land
auctions in cities nationwide have slowed in recent months, reflecting shrinking
consumer demand and what one executive called a “winter mode” strategy of major
developers.
The China Index Academy said home prices fell by an average 0.28% month
on month in November, the third monthly decline in a row.
mrcplast.com
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