¡¡¡¡In anticipation of weaker butadiene and its downstream markets in the new year, end-users are reducing their 2019 term volumes by 10-20%, Chinese producers told S&P Global Platts Thursday.

¡¡¡¡The year end is the annual contract negotiation season and several Chinese producers are in the midst of negotiating or have settled their contracts.

¡¡¡¡One producer said that his term contracts have already been inked and buyers are contracting less volumes in 2019 compared with 2018.

¡¡¡¡"This year, I have customers asking for around 50% of their required butadiene volumes to be on term. Last year, they mostly contracted 60% of their feedstock," he said, adding that customers were allocating a greater percentage to spot buying in anticipation of cheaper prices.

¡¡¡¡Another producer currently in the midst of discussions agreed, adding that uncertainty surrounding the US-China trade war and the expectation of poor performance in the downstream synthetic rubber and acrylonitrile butadiene styrene markets, have driven buyers to request less volumes in their new contracts.

¡¡¡¡"Total requested term volumes are approximately 10-20% less," he said. Both declined to comment on pricing for the contracts.

¡¡¡¡One ABS producer confirmed this, adding that he would be reducing his annual contract volumes by 5-10% in 2019.

¡¡¡¡Not all producers agreed, two synthetic rubber producers said their volumes will remain stable. One said that his contracted volumes would remain at 50% of total annual estimated consumption.

¡¡¡¡"We need to leave ample room for uncertain market conditions," he said.

¡¡¡¡Both the ABS and synthetic rubber markets have been badly hit since the latest round of US import duties in September, which placed 10% tariffs on several Chinese products including plastic and tyres.

¡¡¡¡S&P Global Platts ABS CFR China prices has tumbled 22.7% since September and Platts SBR CFR Northeast Asia assessments have slumped 19.7% in the same period.

¡¡¡¡The Asian butadiene prices have tumbled more aggressively, shedding 35.3% in the same period. Platts assessed butadiene prices at $1,125/mt CFR China Wednesday.

¡¡¡¡Market participants have voiced fears over an even greater market impact from the next proposed round of tariffs on Chinese goods, slated to take place in January.

¡¡¡¡Elsewhere in Asia, several other Asian producers such as India's Haldia Petrochemicals have also begun their contract negotiations.