BDO prices up on feedstock supply concerns
Asian butanediol (BDO) spot prices for regional parcels to the key China market have increased by $50-100/tonne during the week ending Tuesday as a group of buyers rushed to purchase material ahead of further price hikes. Prevailing firm feedstock propylene and butadiene prices, coupled with tighter-than-expected supply amid planned and unplanned shutdowns at local and regional plants, may potentially cause BDO prices to increase further, market participants said.
Sporadic bulk cargoes were heard to be concluded at $3,100/tonne CFR China Main Port (CMP) for delivery in August.
Another discussion for a bulk parcel for August is underway with buy-sell indications at $2,950-3,100/tonne CFR CMP.
Selling indications for fresh lots were at above $3,200/tonne CFR CMP.
Around 200 tonnes of northeast Asian material in drum was booked at $3,300-3,400/tonne CFR CMP for shipment in August.
Negotiations for another drummed cargo from northeast Asia are ongoing at $3,250-3,350/tonne CFR CMP for the same delivery period.
Earlier this month, Taiwanese major Formosa Petrochemical Corp (FPCC) shut its 540,000 bbl/day refinery in Mailiao following a fire that broke out at a propylene pipeline on 31-31 July. The producer subsequently declared force majeure on all grades of its petroleum products on 2 August.
Market players said they were concerned that the rotational shutdowns at the Mailiao refinery and petrochemical complex for safety checks, which were ordered by the Taiwanese government, may result in a disruption of feedstock supply in the near term.
Officials from Formosa Chemicals & Fibre Corp (FCFC) said the company remains unclear about which units will be shut as a result of the blanket order issued by the Taiwanese government as discussions with the authorities are ongoing.
No damage was reported at Nan Ya Plastics’ BDO No 1 and 2 line at the same complex, with nameplate capacities of 40,000 tonnes/year and 60,000 tonnes/year respectively. However, the producer suspended all its offers since it has shut both facilities indefinitely under government directives.
The buying sentiment among downstream end-users was mixed. A group of buyers from the derivative polybutylene terephthalte (PBT) and thermoplastic polyurethanes (TPU) emerged in the market to replenish their inventories because they feared BDO prices may increase further in the coming weeks.
In contrast, the demand from the derivative polyurethane (PU), tetrahydrofuran (THF), polytetramethylene ether glyol (PTMEG) and gamma-butyrolactone (GBL) sectors is still lukewarm. Buyers said business activity has slowed down significantly because of reduced orders, particularly from the US and Europe. As a result, end-users preferred to adopt a cautious stance and purchased smaller parcels on a need-to basis.
On the local front in China, BDO prices surged by yuan (CNY) 1,000/tonne week on week to CNY22,500-23,500/tonne DEL, fuelled by persistently tight supply.
Contract
In Taiwan, a local supplier was heard to have settled its negotiation for August at New Taiwan dollars (NT$) 100/kg DEL.
Negotiations are underway between two other sellers and their buyers.
The contract prices in Taiwan for July were settled at NT$94-103/kg DEL, up by NT$2/kg at the low end of the range in line with tight supply. The new prices are estimated by market players to be equivalent to around $3,258-3,570/tonne on a DEL basis.
In South Korea, discussions for contract prices for August are ongoing. A local supplier is lobbying for a rollover.
The July contracts were concluded at $3,200-3,350/tonne DEL, up by $100/tonne month on month because of stable demand and ample supply.
($1 = CNY6.44)
($1 = NT$28.98)
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