Asian spot butadiene prices have slumped 18-20% in November under selling pressure as buyers retreated amid ample supply.
Key benchmark CFR China has fallen $360/mt or 20% since October 31 to be assessed at $1,400/mt Thursday. The FOB Korea benchmark has dropped $300/mt or 18% over the same period to $1,390/mt.
Week on week, CFR China is down $195/mt and FOB Korea is down $156/mt.
That puts the CFR China spot prices 33% lower than the 2013 high of $2,105/mt seen February 27 and FOB Korea 34% lower than its 2013 high of $2,100/mt on the same day.
The butadiene price slump pushed production margins into negative territory Thursday for the first time since September 26. Assuming a manufacturing cost of $500/mt, naphtha C+F Japan cargoes assessed at $951.75/mt and FOB Korea butadiene assessed at $1,390/mt, the butadiene margin was minus $61.75/mt Thursday, down from plus $77.25 Wednesday, according to Platts data.
Offers quickly fell below $1,500/mt this week as buyers stayed away from the market.
Sources said a deal for two 2,000-mt lots was done at $1,400/mt, one CFR China and the other CFR Taiwan, for delivery in the second half of December. The seller and buyer confirmed the trade but asked not be named.
Participants said this week that the few Chinese buyers in the market are not willing to pay above $1,300/mt.
Traders said limited buying interest compounded by pressure to offload material before year-end fiscal declarations created ample supplies. A source said Chinese automakers and tire makers were also shrinking inventory for tax reasons, which further reduced butadiene demand.
Producers called it a buyer's market, with some deepsea cargoes arriving and few plant turnarounds.
"Demand is no good this year," he said. "The growth rate looks [to be] zero."
Despite some fixed-price trades done this week, the market's bearishness made buyers less willing to sell on a fixed-price basis, sources said.
