Supply Tightness and Strong Downstream Demand Trigger Asian Butadiene to Follow Upswing
- Journalist: Francis Stokes
Asian Butadiene (BD) prices have surpassed the levels of December’19 due to limited supply and robust demand from the downstream acrylonitrile butadiene styrene (ABS) and nitrile rubber sectors. The supply crunch was exacerbated by the delayed restart of Lotte Chemical's 1.1mn TPA Daesan cracker which remained shut since March’20 after an explosion, by another two weeks to mid-December. The Daesan complex houses a 190 KTPA Butadiene extraction unit. An unexpected shutdown at Sinopec Zhongke's 120 KTPA BD unit further added to the gravity of the situation. However, industry sources revealed that Butadiene supplies are expected to ease in FY21 with new production units slated to come onstream during the first quarter of 2021. These include a 60,000 TPA expansion complex by Sinopec in China, 85,000 TPA unit by JG Summit in the Philippines and an 80,000 TPA unit at Map Ta Phut site in Thailand. Sinopec, China raised its benchmark list price thrice in the week starting 19th October, causing BD to show a cumulative increase by USD 225 per tonne to nearly USD 1122 per tonne ex-tank China by 21st October. The increase was strongly supported by rising demand for ABS from the electronics and toys sector and nitrile rubber which is gaining popularity for manufacturing personal protective equipment such as gloves, whose demand has skyrocketed since the Covid-19 pandemic.