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Asian butanediol appears poised to hit a new 10-month low in early next year

December 21/2011

(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.

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 dont 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.

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.

Author:Marina Ivanova
Category:General News
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