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| Asian butadiene-naphtha spread dives more than $100/mt to four-month low |
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| News Source：http://www.jinchemical.com/
; SendDate：2014-10-22 14:52:09 |
The Asian butadiene-naphtha spread dived $131.75/mt on the day to $345.13/mt Friday -- the lowest level since June 4 -- amid a quickly falling butadiene market due to rising supplies, Platts data showed Monday.
On June 4, the spread was calculated at $336.25/mt.
The FOB Korea butadiene price benchmark dived $115/mt day on day to be assessed at $1,055/mt Friday, the lowest level since August 1, 2013, when the price was assessed at $1,000/mt -- hit by rising supplies in the region amid an influx of deepsea materials from the US and Europe.
In Asia, butadiene inventories are reported to be building up as lower downstream rubber plant operations created excess butadiene supplies in the region.
Market sources said operating rates of synthetic rubber in China are currently around 50%, while the region's butadiene plants are running at high operating rates.
Typically, butadiene is produced as a by-product of a naphtha cracker, which mainly produces ethylene, a feedstock for plastics.
The Asian ethylene-naphtha spread is currently hovering over $700/mt, much higher than the breakeven point of $300-350/mt.
"Naphtha cracker operators are running their plants at high rates because of a fat ethylene margin," a market source said.
Market sources said the Asian butadiene market could fall further as butadiene supplies would likely remain heavy, with no butadiene demand pickup expected from key synthetic rubber sector.
Tire producers -- the key downstream of synthetic rubber -- currently prefer to use natural rubber as a feedstock instead of synthetic rubber, as natural rubber costs less.
The premium of synthetic rubber over natural rubber was heard at more than $300/mt. It is more economical for tire producers to use natural rubber than synthetic rubber if the spread exceeds $100/mt. |
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