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Asia BD may surpass USD3,000/tonne in January

December 28/2011

(ICIS) -- Butadiene (BD) prices in Asia may rise above USD 3,000/tonne (EUR 2,310/tonne) in January as traders snap up dwindling stocks ahead of the Lunar New Year, traders and producers said.

Spot offers for January shipments have increased to USD 3,100/tonne FOB (free on board) Korea amid market talk that some Japanese traders have bought cargoes at around this price level.
With intra-regional freight costs at USD 60-80/tonne, this would mean that January shipments would cost USD 3,160-3,180/tonne CFR (cost & freight) northeast (NE) Asia.

In the week ended 23 December, spot prices were at USD 2,800-2,850/tonne CFR NE Asia, according to ICIS.
BD prices in Asia have rebounded sharply since bottoming out at USD 1,550-1,600/tonne CFR NE Asia in the week ended 11 November.

Cracker production cutbacks in China, South Korea and Taiwan, coupled with a surge in pre-Lunar New Year buying have seen BD prices in Asia doubling since the middle of November.
УWe are getting more enquiries as there is a lot of interest from traders and China buyers to procure material before the Lunar New Year,Ф a Korean supplier said.

China will be closed on 22-28 January for the Lunar New Year festivities.
January will be a short trading month as several countries in Asia including Hong Kong, South Korea, Taiwan, Singapore, Malaysia and Vietnam also celebrate the holiday.

However, resistance to the relentless BD price spikes is rising as several downstream styrene butadiene rubber (SBR) and butadiene rubber (BR) producers in China, South Korea and Taiwan have said they will cut the operating rates of their respective plants to 70-80% of capacity in January.
BD is a major feedstock for SBR and BR, the main raw materials used to make tyres for the automotive industry.

The SBR and BR markets are not expected to strengthen for the rest of the first quarter, which is a seasonally a slow demand quarter for the tyre-making industry.
The ongoing eurozone debt crisis and concerns over a global slowdown have also dampened buying sentiment as Asia is a major production centre for the global tyre market.
Many synthetic rubber producers expect demand to weaken after the Lunar New Year, which will in turn dampen demand for BD.

Tags:car components, neftehimiya, rubber.
Category:General News
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