Deep-sea BD Heading Towards Asia Dampens Prices
SINGAPORE (ICIS news)--A flood of deep-sea butadiene (BD) cargoes into Asia, low consumer confidence and market uncertainty amid the deepening global recession have been depressing prices in the region, traders said on Monday.
“There is no demand in the US and Europe and petrochemical cargoes from these regions are flooding Asia, in particular, China,” a trader said.
The consumption-driven US economy is in bad shape and its automotive industry ailing, prompting Brazil to re-route its surplus BDs to Asia as it can no longer rely on its traditional market.
About 9,000 tonnes of BD from Brazil are heading towards China and Taiwan, but regional demand is also weak that an influx of imported cargoes just creates further pressure on prices, market sources said.
BD spot prices in Asia have fallen about $50/tonne (€38.5/tonne) in the past month to $500-530/tonne CFR (cost and freight) northeast (NE) Asia due to these surplus cargoes from Latin America, they said.
Falling BD prices have also fuelled the decline in derivative BR prices, traders said. BD is the raw material for BR, which is used in the manufacture of tyres for the automotive industry.
BR prices have fallen about $100/tonne in the past month to $1,300/tonne CFR NE Asia as supply exceeds demand. Deep-sea BR cargoes from Europe and Iran are competing with the traditional BR producers from Japan and Korea
The global economic downturn that originated in the US deeply affected Asia given the region's heavy reliance on exports as a growth engine. Japan, Singapore, Hong Kong, Taiwan and New Zealand have slipped into technical recession while Malaysia and Thailand are looking at a full-year contraction in GDP output.
Asia's biggest emerging economy China has also been feeling the heat and had shown rapid deterioration in economic fundamentals since the fourth quarter, prompting the government's announcement of a massive yuan (Y)4,000bn fiscal stimulus package to ensure it will still post healthy growth.
Latest data on China’s consumer price index (CPI) showed a 1.6% year-on-year decline last month while its producer price index (PPI) fell 4.5%, the first time prices declined in about six years.
Fuelling the CPI fall, petrochemical products such as butadiene rubber (BR), polystyrene (PS) and polyester yarn (PFY) saw double-digit price declines in February compared to levels a year earlier.
Although demand in China picked up recently in February following the lunar new year holidays, some petrochemical prices have not kept up with the pace of renewed interest due to the influx of imports from Europe and the US.
“There is no demand in the US and Europe and petrochemical cargoes from these regions are flooding Asia, in particular, China,” a trader said.
The consumption-driven US economy is in bad shape and its automotive industry ailing, prompting Brazil to re-route its surplus BDs to Asia as it can no longer rely on its traditional market.
About 9,000 tonnes of BD from Brazil are heading towards China and Taiwan, but regional demand is also weak that an influx of imported cargoes just creates further pressure on prices, market sources said.
BD spot prices in Asia have fallen about $50/tonne (€38.5/tonne) in the past month to $500-530/tonne CFR (cost and freight) northeast (NE) Asia due to these surplus cargoes from Latin America, they said.
Falling BD prices have also fuelled the decline in derivative BR prices, traders said. BD is the raw material for BR, which is used in the manufacture of tyres for the automotive industry.
BR prices have fallen about $100/tonne in the past month to $1,300/tonne CFR NE Asia as supply exceeds demand. Deep-sea BR cargoes from Europe and Iran are competing with the traditional BR producers from Japan and Korea
The global economic downturn that originated in the US deeply affected Asia given the region's heavy reliance on exports as a growth engine. Japan, Singapore, Hong Kong, Taiwan and New Zealand have slipped into technical recession while Malaysia and Thailand are looking at a full-year contraction in GDP output.
Asia's biggest emerging economy China has also been feeling the heat and had shown rapid deterioration in economic fundamentals since the fourth quarter, prompting the government's announcement of a massive yuan (Y)4,000bn fiscal stimulus package to ensure it will still post healthy growth.
Latest data on China’s consumer price index (CPI) showed a 1.6% year-on-year decline last month while its producer price index (PPI) fell 4.5%, the first time prices declined in about six years.
Fuelling the CPI fall, petrochemical products such as butadiene rubber (BR), polystyrene (PS) and polyester yarn (PFY) saw double-digit price declines in February compared to levels a year earlier.
Although demand in China picked up recently in February following the lunar new year holidays, some petrochemical prices have not kept up with the pace of renewed interest due to the influx of imports from Europe and the US.
by Helen Tan
Quoted from: www.ICIS.com
