SINGAPORE--The upside potential of the Asian butadiene (BD) spot market may be limited in view of the drop in crude and naphtha prices, traders, producers and end-users said on Tuesday.
Although some traders were optimistic that BD spot prices still had the potential to rise to $3,500/tonne CFR (cost and freight) Asia, other players were of the view that prices had peaked at around $3,200/tonne CFR northeast (NE) Asia.
"The BD spot price has hit the ceiling and will now likely be under pressure to fall as end-users will not be able to accept any further price hike," a downstream South Korean synthetic rubber producer said.
BD spot prices had spiked by a staggering $1,000/tonne since June, fuelled by tight supply and soaring crude and naphtha values.
However, crude prices had fallen to around $130/bbl, down about $16/bbl from earlier this month when crude breached $147/bbl. Likewise, naphtha values had also dropped to around $1,129/tonne CFR Japan, down from around $1,255/tonne in early July.
The spectacular surge in BD spot prices was due to several reasons, mainly tight crude C4 supply and soaring crude and naphtha values.
Traders scrambling for dwindling spot product also helped fuel the price upsurge with aggressive bids in recent months.
Rumours that an Indian producer was shutting down its 140,000 tonne/year BD unit due to technical problems had also added fuel to the spot market.
However, the Indian producer did not confirm any plans to shut down the Hazira-based unit. No further details were available.
Some players believed that prices could stabilise or even fall sharply as several traders had withdrawn from the spot market, given the uncertainty over the crude price direction and stiffening resistance of end-users.
"It is between the producers and end-users as traders are now largely out of the spot market," a South Korean trader said.
Although some traders were optimistic that BD spot prices still had the potential to rise to $3,500/tonne CFR (cost and freight) Asia, other players were of the view that prices had peaked at around $3,200/tonne CFR northeast (NE) Asia.
"The BD spot price has hit the ceiling and will now likely be under pressure to fall as end-users will not be able to accept any further price hike," a downstream South Korean synthetic rubber producer said.
BD spot prices had spiked by a staggering $1,000/tonne since June, fuelled by tight supply and soaring crude and naphtha values.
However, crude prices had fallen to around $130/bbl, down about $16/bbl from earlier this month when crude breached $147/bbl. Likewise, naphtha values had also dropped to around $1,129/tonne CFR Japan, down from around $1,255/tonne in early July.
The spectacular surge in BD spot prices was due to several reasons, mainly tight crude C4 supply and soaring crude and naphtha values.
Traders scrambling for dwindling spot product also helped fuel the price upsurge with aggressive bids in recent months.
Rumours that an Indian producer was shutting down its 140,000 tonne/year BD unit due to technical problems had also added fuel to the spot market.
However, the Indian producer did not confirm any plans to shut down the Hazira-based unit. No further details were available.
Some players believed that prices could stabilise or even fall sharply as several traders had withdrawn from the spot market, given the uncertainty over the crude price direction and stiffening resistance of end-users.
"It is between the producers and end-users as traders are now largely out of the spot market," a South Korean trader said.
