Asian butadiene-naphtha spread reaches eight-month low

The price spread between butadiene and naphtha narrowed $3/mt from Nov. 8 to $638/mt Nov. 11, weighed down by the sluggish butadiene market.

The Nov. 11 spread was the lowest since March 14, when it was calculated at $636.50/mt, S&P Global Commodity Insights data showed. The spread is still higher than the typical breakeven level of $300-$350/mt, the data showed.

The Platts-assessed CFR China butadiene price fell $10/mt from Nov. 8 to a nine-month low of $1,290/mt Nov. 11, while the CFR Japan naphtha price was assessed down $7/mt at $652/mt over the same period, Commodity Insights data showed.

The Asian butadiene market has been edging lower, hit by rising regional supplies.

Spot supplies from Southeast Asia, Japan, South Korea, China as well as Taiwan are seen to be available. An arbitrage window to Asia from Europe/the US has been closed amid falling Asian butadiene. Still, regional supplies are more than enough to accommodate spot demand, according to market sources.

Platts assessed the CIF USG butadiene price at 49 cents/lb Nov. 8, or $1,079/mt, while the FOB Rotterdam butadiene price was assessed at $1,090/mt, Commodity Insights data showed. The location spread between Asia and Europe/the US was calculated at $210-$220/mt, lower than the current freight rates of above $300/mt, the data showed.

Market sources said the spread between butadiene and naphtha would narrow further, as butadiene would likely stay bearish, tracking falling downstream rubber markets.

China's January polybutadiene futures fell Yuan 530/mt on the day, hovering at around Yuan 13,460/mt, latest data from the Shanghai Futures Exchange showed.

On Nov. 8, Platts assessed the CFR Northeast Asia styrene-butadiene-rubber price $20/mt lower on the week at $1,930/mt, Commodity Insights data showed.

Downstream Chinese rubber prices were under pressure, as the market was disappointed by China's Yen 10 trillion stimulus package.